Linear Social Interactions Models

Lawrence Blume, William Brock, Steven Durlauf and Rajshri Jayaraman
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Rajshri Jayaraman: European School of Management and Technology, Berlin, Germany

No 298, Economics Series from Institute for Advanced Studies

Abstract: This paper provides a systematic analysis of identification in linear social interactions models. This is both a theoretical and an econometric exercise as the analysis is linked to a rigorously delineated model of interdependent decisions. We develop an incomplete information game that describes individual choices in the presence of social interactions. The equilibrium strategy profiles are linear. Standard models in the empirical social interactions literature are shown to be exact or approximate special cases of our general framework, which in turn provides a basis for understanding the microeconomic foundations of those models. We consider identification of both endogenous (peer) and contextual social effects under alternative assumptions on a priori information about network structure available to an analyst, and contrast the informational content of individual-level and aggregated data. Finally, we discuss potential ramifications for identification of endogenous group selection and differences between the information sets of analysts and agents.

Keywords: Social interactions; identification; incomplete information games (search for similar items in EconPapers)
JEL-codes: C21 C23 C31 C35 C72 Z13 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2013-06
New Economics Papers: this item is included in nep-ecm, nep-soc and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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https://irihs.ihs.ac.at/id/eprint/2208 First version, 2013 (application/pdf)

Related works:
Journal Article: Linear Social Interactions Models (2015)
Working Paper: Linear Social Interactions Models (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ihs:ihsesp:298

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