Group representation concerns and network formation

This paper studies processes of integration and segregation using a connections model in which individuals form valuable links that also entail a cost. Individuals belong to two different groups and care about whether their own group represents a sufficient fraction in their neighborhood. Concerns for representation promote the segregation of societies as even for small linking costs individuals do not link to different others because of the threat that their group becomes under-represented. For certain cost ranges, concerns for representation also determine efficient networks because forming links with members of the opposite group entails a utility loss due to under-representation.