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Social Interactions: A Game Theoretic Approach

Haiqing Xu ()

No 130914, Department of Economics Working Papers from The University of Texas at Austin, Department of Economics

Abstract: This paper uses a game theoretic model to capture the interactions among individuals within a social network, and establishes nonparametric identification and inference on the game structural model. Consider observations from a single equilibrium of a network game in which each player chooses an action from a finite set and is subject to interactions that are local --- the interactions only occur among friends. All observations are potentially dependent on each other because they are interpreted as arising from a single equilibrium of settings where players interact directly or indirectly. Simple assumptions about the structure are made that ensure that the game has a unique equilibrium and the equilibrium has a stability property. The formulation of this stability property is new and serves as the basis for statistical inference. I establish the identification of the structural model and introduce an estimation procedure called (sieve) maximum approximated likelihood.

Keywords: Local interaction; social networks; incomplete information games; sieve maximum likelihood estimation; maximum approximated likelihood estimation (search for similar items in EconPapers)
JEL-codes: C14 C35 C62 C72 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2010-11
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