Linear Social Interactions Models

Blume, Lawrence; Brock, William A.; Durlauf, Steven N. and Jayaraman, Rajshri (June 2013) Linear Social Interactions Models. Former Series > Working Paper Series > IHS Economics Series 298


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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.;

Item Type: IHS Series
Keywords: 'Social interactions' 'Identification' 'Incomplete information games'
Classification Codes (e.g. JEL): C21, C23, C31, C35, C72, Z13
Date Deposited: 26 Sep 2014 10:39
Last Modified: 20 Jun 2024 06:00
ISBN: 1605-7996

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