Toward a General Theory of Peer Effects

Vincent Boucher, Michelle Rendall, Filipp Ushchev and Yves Zenou

ULB Institutional Repository from ULB -- Universite Libre de Bruxelles

Abstract: There is substantial empirical evidence showing that peer effects matter in many activities. The workhorse model in empirical work on peer effects is the linear-in-means (LIM) model, whereby it is assumed that agents are linearly affected by the mean action of their peers. We develop a new general model of peer effects that relaxes the linear assumption of the best-reply functions and the mean peer behavior and that encompasses the spillover, conformist model, and LIM model as special cases. Then, using data on adolescent activities in the United States, we structurally estimate this model. We find that for many activities, individuals do not behave according to the LIM model. We run some counterfactual policies and show that imposing the mean action as an individual social norm is misleading and leads to incorrect policy implications.

Keywords: Spillovers; conformism; structural estimation; policies (search for similar items in EconPapers)
Date: 2024-01-01
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Published in: Econometrica (2024) v.92 n° 2,p.543-565

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Related works:
Journal Article: Toward a General Theory of Peer Effects (2024)
Working Paper: Towards a General Theory of Peer Effects (2023)
Working Paper: Toward a General Theory of Peer Effects (2022)
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