The Estimation of Network Formation Games with Positive Spillovers

Vincent Boucher

Cahiers de recherche from Centre de recherche sur les risques, les enjeux économiques, et les politiques publiques

Abstract: I present a behavioural model of network formation with positive network externalities in which individuals have preferences for being part of a clique. The behavioural model leads to an associated supermodular (Topkis, 1979) normalform game. I show that the behavioural model converges to the greatest Nash equilibrium of the associated normal-form game. I propose an approximate Bayesian computation (ABC) framework, using original summary statistics, to make inferences about individuals' preferences, and provide an illustration using data on high school friendships.

Keywords: Network formation; Supermodular Games; Approximate Bayesian Computation (search for similar items in EconPapers)
JEL-codes: C11 C15 C72 D85 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-ecm, nep-gth, nep-hpe and nep-net
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:lvl:crrecr:1710

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