Social Interactions and Markets Gary S. Becker University of - PowerPoint PPT Presentation

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Social Interactions and Markets Gary S. Becker University of Chicago Building Bridges between Economics and Personality Psychology May 9, 2009 Gary S. Becker Social Interactions Employer Discrimination and Heterogeneity in Tastes D Costs /

Social Interactions and Markets Gary S. Becker University of Chicago Building Bridges between Economics and Personality Psychology May 9, 2009 Gary S. Becker Social Interactions
Employer Discrimination and Heterogeneity in Tastes D Costs / Prices Costs of a Discriminator Costs of a Non- Discriminator D Output Discriminators have to pay to discriminate. Cost too great in this case. Gary S. Becker Social Interactions
Escalating Cost of Social Preferences Willingness to pay as function of s m L P M / P V f s m = 1 1 s m , fraction of L who own M 𝑡 Gary S. Becker Social Interactions
Fair Wage and Market Wage First Scenario D No Job Wage Individual’s Fair Wage w* * 𝑥 Market Wage D N Quantity of Labor Gary S. Becker Social Interactions
Fair Wage and Market Wage Second Scenario D Wage Unemployment All Individuals’ Fair Wage = 𝑥 ∗ 𝑥 D N* N Quantity of Labor Gary S. Becker Social Interactions

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