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SOCIAL INTERACTIONS IN LARGE NETWORKS: A GAME THEORETIC APPROACH

Haiqing Xu

International Economic Review, 2018, vol. 59, issue 1, 257-284

Abstract: This article studies estimation of social interactions in a large network game, where all observations come from one single equilibrium of a network game with asymmetric information. Simple assumptions about the structure are made to establish the existence and uniqueness of the equilibrium. I show that the equilibrium strategies satisfy a network decaying dependence condition requiring that dependence between two players' decisions decay with their network distance, which serves as the basis for my statistical inference. Moreover, I establish identification and propose a computationally feasible and efficient estimation method, which is illustrated by an empirical application of college attendance.

Date: 2018
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https://doi.org/10.1111/iere.12269

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International Economic Review is currently edited by Michael O'Riordan and Dirk Krueger

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