Social interdependency, multiple equilibiria and equilibirium selection : theory and evidence from the academic labour market

![CDATA[Innate abilities and motivation are the two major ingredients of human achievements. Motivation induces efforts that interplay with abilities to shape one's achievements, which in turn unleash further motivation. The goal of this paper is to develop and assess testable theories of human achievements in real-world settings in which people socially interact to form their preferences and their optimal behaviour. We develop and test a simple theory of social behaviour that is predicated on three critical assumptions: first, people interact among themselves to endogenously determine their preferences and their optimal individual behaviour; second, individual behaviour has spillover effects on others and thereby creates a collective trait/norm, or endogenous environment; and finally agents compete locally for resources. We develop an interactive model to establish how multiple equilibria can arise and how agents can select their equilibrium behavior. The empirical study explains the determinants of the choice of equilibrium.]]