Essays in social economics

Abstract

This thesis consists of three microeconomic essays that depart from the perfectly informed and self-interested agent to analyze important socioeconomic problems which do not find a fully satisfactory explanation under more standard characterizations of individual behavior. The first chapter explores the role of economic information on housing tenure choice during periods of generalized optimism, such as housing bubbles. A microeconomic theoretical model including biased beliefs about future house prices is developed, and its main predictions tested in the context of the last Spanish housing bubble. The main finding is that better-informed households were less likely than worseinformed ones to purchase their main dwelling in the years leading up to the burst, when houses were highly overvalued. The second chapter focuses on how the relationship between diversity and performance in hierarchical organizations is mediated by group size. It tests theoretical predictions for individual performance in contexts where knowledge spillovers are important for production, by analyzing the case of Pakistani tax collectors. A legal rule which dictates that 10% of positions must be reserved for members of the army renders this case particularly convenient for observing the effects of diversity. The third and last chapter proposes a new explanation for the relationship between within-country cultural diversity and support for regionalism —both in the form of demands for more autonomy and outright secessionism. This suggests that otherregarding preferences of individuals might play an important role. We test this relationship using data on electoral support for regionalist parties across tenWestern European countries, finding that a region being relatively richer than the country to which it belongs is associated with higher electoral support for regionalist parties only to the extent that it is culturally differentiated.