Estimation Of Peer Effects In Endogenous Social Networks

Download or read book Estimation of Peer Effects in Endogenous Social Networks written by Ida Johnsson and published by . This book was released on 2017 with total page 76 pages. Available in PDF, EPUB and Kindle. Book excerpt: We propose a method of estimating the linear-in-means model of peer effects in which the peer group, defined by a social network, is endogenous in the outcome equation for peer effects. Endogeneity is due to unobservable individual characteristics that influence both link formation in the network and the outcome of interest. We propose two estimators of the peer effect equation that control for the endogeneity of the social connections using a control function approach. We leave the functional form of the control function unspecified and treat it as unknown. To estimate the model, we use a sieve semiparametric approach, and we establish asymptotics of the semiparametric estimator.