Peer effects and endogenous social interactions

Koen Jochmans

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Abstract: This paper proposes a solution to the problem of the self-selection of peers in the linear-in-means model. We do not require to specify a model for how the selection of peers comes about. Rather, we exploit two restrictions that are inherent in many such specifications to construct conditional moment conditions. The restrictions in question are that link decisions that involve a given individual are not all independent of one another, but that they are independent of the link decisions made between other pairs of individuals that are located sufficiently far away in the network. These conditions imply that instrumental variables can be constructed from leave-own-out networks.

Keywords: Instrumental variable; Linear-in-means model; Network; Self-selection (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-ecm, nep-net and nep-ure
Note: View the original document on HAL open archive server: https://hal.science/hal-04164668v1
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Citations: View citations in EconPapers (7)

Published in Journal of Econometrics, 2023, 235 (2), pp.1203-1214. ⟨10.1016/j.jeconom.2022.10.004⟩

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Related works:
Journal Article: Peer effects and endogenous social interactions (2023)
Working Paper: Peer Effects and Endogenous Social Interactions (2022)
Working Paper: Peer effects and endogenous social interactions (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04164668

DOI: 10.1016/j.jeconom.2022.10.004

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