Seminar by Debabrata Pal (Jawaharlal Nehru University)

We examine how social networks influence the choice behaviours of rational  individuals. We consider a choice situation in which a decision maker (e.g., employer, interviewer, moneylender)  first  shortlists a set of agents based on some objective criteria and then chooses the final set of agents based on his(her) relationship with the agents in his (her) social or acquaintance network. There is a large body of literature that provides empirical evidence on such choice behaviours. We show, rationalizability of choice functions (correspondences) depends on the structures of the acquaintance network (network  effect), and Axioms Weak WARP (WWARP) and Expansion (E) are no longer sufficient to guarantee rationalizability. We provide a complete characterization of rational choice functions (correspondences) under network effect.