Identification and inference of network formation games with misclassified links

Luis E. Candelaria and Takuya Ura

Journal of Econometrics, 2023, vol. 235, issue 2, 862-891

Abstract: This paper considers a network formation model when links are potentially misclassified. We focus on a game-theoretical model of strategic network formation with incomplete information, in which the linking decisions depend on agents’ exogenous attributes and endogenous network characteristics. In the presence of link misclassification, we derive moment conditions that characterize the identified set for the preference parameters associated with homophily and network externalities. Based on the moment equality conditions, we provide an inference method that is asymptotically valid when a single network of many agents is observed. Finally, we apply our misclassification-robust method to study the preference parameters of a lending network in rural villages in southern India.

Keywords: Misclassification; Network formation models; Strategic interactions; Incomplete information (search for similar items in EconPapers)
JEL-codes: C13 C31 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:econom:v:235:y:2023:i:2:p:862-891

DOI: 10.1016/j.jeconom.2022.07.007

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