Peer Effects in Endogenous Networks

Timo Hiller ()

Bristol Economics Discussion Papers from School of Economics, University of Bristol, UK

Abstract: This paper presents a simple model of strategic network formation with local complementarities in effort levels and positive local externalities. Equilibrium networks display - other than the complete and the empty network - a core-periphery structure, which is commonly observed in empirical studies. Ex-ante homogenous agents may obtain very different ex-post outcomes. These findings are relevant for a wide range of social and economic phenomena, such as educational attainment, criminal activity, labor market participation and R&D expenditures of firms.

Keywords: Network formation; peer effects; strategic complements; positive externalities (search for similar items in EconPapers)
JEL-codes: D62 D85 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2012-11
New Economics Papers: this item is included in nep-cdm, nep-cse, nep-mic, nep-net and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:bri:uobdis:12/633

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