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Peer effects and endogenous social interactions

Author

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  • Koen Jochmans

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract
This paper proposes a solution to the problem of the self-selection of peers in the linear-in-means model. We do not require to specify a model for how the selection of peers comes about. Rather, we exploit two restrictions that are inherent in many such specifications to construct conditional moment conditions. The restrictions in question are that link decisions that involve a given individual are not all independent of one another, but that they are independent of the link decisions made between other pairs of individuals that are located sufficiently far away in the network. These conditions imply that instrumental variables can be constructed from leave-own-out networks.

Suggested Citation

  • Koen Jochmans, 2023. "Peer effects and endogenous social interactions," Post-Print hal-04164668, HAL.
    • Handle: RePEc:hal:journl:hal-04164668
    DOI: 10.1016/j.jeconom.2022.10.004
    Note: View the original document on HAL open archive server: https://hal.science/hal-04164668
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    as
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    Cited by:

    1. Rhys Murrian & Paul A. Raschky & Klaus Ackermann, 2024. "Friends, Key Players and the Adoption and Use of Experience Goods," Monash Economics Working Papers 2024-17, Monash University, Department of Economics.
    2. Aristide Houndetoungan & Cristelle Kouame & Michael Vlassopoulos, 2024. "Identifying Peer Effects in Networks with Unobserved Effort and Isolated Students," Papers 2405.06850, arXiv.org.
    3. Houndetoungan, Aristide & Kouame, Cristelle & Vlassopoulos, Michael, 2024. "Identifying Peer Effects in Networks with Unobserved Effort and Isolated Students," IZA Discussion Papers 16998, Institute of Labor Economics (IZA).
    4. Alexandra de Gendre & Nicolás Salamanca, 2020. "On the Mechanisms of Ability Peer Effects," Melbourne Institute Working Paper Series wp2020n19, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    5. Jochmans, Koen, 2023. "Many (Weak) Judges in Judge-Leniency Designs," TSE Working Papers 23-1481, Toulouse School of Economics (TSE).
    6. Aristide Houndetoungan, 2024. "Count Data Models with Heterogeneous Peer Effects under Rational Expectations," Papers 2405.17290, arXiv.org.
    7. Diemer, Andreas, 2022. "Endogenous peer effects in diverse friendship networks: Evidence from Swedish classrooms," Economics of Education Review, Elsevier, vol. 89(C).
    8. Tadao Hoshino, 2023. "Causal Interpretation of Linear Social Interaction Models with Endogenous Networks," Papers 2308.04276, arXiv.org, revised Oct 2023.

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    More about this item

    Keywords

    Instrumental variable; Linear-in-means model; Network; Self-selection;
    All these keywords.

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation

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