Heterogeneity in peer effects for binary outcomes

Mathieu Lambotte

Papers from arXiv.org

Abstract: I introduce heterogeneity into the analysis of peer effects arising from conformity by allowing peer-effect parameters to vary across agents' actions. Using a structural model based on a simultaneous network game with incomplete information, I derive conditions that guarantee the uniqueness of the equilibrium and the identification of heterogeneous peer-effect parameters. Applying the model to data on smoking and alcohol consumption among secondary school students, and conducting policy simulations, I show that assuming a homogeneous preference for conformity leads to biased estimates of peer effects and ex ante policy evaluations.

Date: 2025-11, Revised 2026-06
New Economics Papers: this item is included in nep-ecm and nep-ure
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