Beschreibung:
Why do peers influence people’s choices? Is it for information (social learning) or for socializing (social utility)? We explore this fundamental question by exploiting unique data and natural experiments from the United States Naval Academy (USNA). We then analyze data on major selections of USNA freshmen, using a rich set of covariates and the random assignment of students to peer groups and courses. We find that students can be influenced by peers into selecting different academic paths relative to what they would have chosen on their own. Through random reassignments—known as “shot-guns” at USNA—of students into new peer groups along with random assignments into courses, we explore the reasons why herding occurs. The preponderance of evidence suggests that social learning, as opposed to social utility, is the key driver for herding behavior