Abstract
In many social systems a small event (or parameter change) can trigger a dramatic transition. We show that social systems whose individuals have an inclination to conform to each other may undergo "phase transitions" very similar to statistical mechanic systems. We develop a general criterion that determines whether a given social system is susceptible to undergo a phase transition and show that phase transitions may occur in a wide range of social systems. The heterogeneity of the agents comprising the system is shown to play a crucial role in determining both the possibility of a transition and its magnitude.
| Original language | English |
|---|---|
| Pages (from-to) | 71-87 |
| Number of pages | 17 |
| Journal | Journal of Economic Behavior and Organization |
| Volume | 57 |
| Issue number | 1 |
| DOIs | |
| State | Published - May 2005 |
Bibliographical note
Funding Information:I am grateful to participants of the Workshop on Economics and Heterogeneous Interacting Agents in Trieste 2002 and to the two anonymous referees of this journal for their many helpful comments and suggestions. The financial support of the Zagagi Fund is gratefully acknowledged.
Keywords
- Heterogeneity
- Market crash
- Social transition