Econometric analysis of models with social interactions

Abstract This chapter discusses two main issues relating to the econometrics of models of social interactions. First, this chapter discusses the identification of models of social interactions. Models with social interactions are typically estimated with data on many small groups. For each group, the data typically consist of the outcome and treatment of each individual and perhaps other data like the demographic characteristics. The identification question asks whether it is possible to use such data to recover information about the underlying model that generated the data. And second, this chapter discusses the interpretation and policy relevance of models of social interactions. An important consideration in the application of models of social interactions concerns the adequacy of the specification of the model. Models of social interactions inevitably involve assumptions, either explicit or implicit, about the nature of the interactions. These assumptions often times entail significant restrictions on behavior that are not necessarily implied by economic theory for all applications. These assumptions also concern the relationship between the observed data and the underlying model that generated the data. Therefore, such assumptions are important considerations in the assessment of the adequacy of models of social interactions for particular applications.

[1]  E. Tamer.  Incomplete Simultaneous Discrete Response Model with Multiple Equilibria , 2003 .

[2]  Brian Krauth,et al.  Simulation-based estimation of peer effects , 2006 .

[3]  E. Glaeser,et al.  Measuring Social Interactions , 1999 .

[4]  Jeremy T. Fox,et al.  A note on identification of discrete choice models for bundles and binary games , 2017 .

[5]  N. Christakis,et al.  The Spread of Obesity in a Large Social Network Over 32 Years , 2007, The New England journal of medicine.

[6]  Bruce I. Sacerdote.  Peer Effects in Education: How Might They Work, How Big Are They and How Much Do We Know Thus Far? , 2011 .

[7]  Jeffrey M. Woodbridge.  Econometric Analysis of Cross Section and Panel Data , 2002 .

[8]  Steven T. Berry,et al.  Empirical Models of Entry and Market Structure , 2007 .

[9]  Raffaele Vardavas,et al.  Can Influenza Epidemics Be Prevented by Voluntary Vaccination? , 2007, PLoS Comput. Biol..

[10]  Xun Tang,et al.  Inference of Signs of Interaction Effects in Simultaneous Games with Incomplete Information , 2010 .

[11]  Steven T. Berry.  Estimation of a Model of Entry in the Airline Industry , 1992 .

[12]  Han Hong,et al.  Estimating Static Models of Strategic Interactions , 2010 .

[13]  Petter Lundborg,et al.  Having the wrong friends? Peer effects in adolescent substance use. , 2006, Journal of health economics.

[14]  Yuanyuan Wan,et al.  Semiparametric identification of binary decision games of incomplete information with correlated private signals , 2014 .

[15]  Lung-fei Lee,et al.  Binary Choice Models with Social Network under Heterogeneous Rational Expectations , 2014, Review of Economics and Statistics.

[16]  C. Manski.  Monotone Treatment Response , 2009, Identification for Prediction and Decision.

[17]  M. Argyle.  Social interactions. , 1976, Science.

[18]  David Card,et al.  Peer Effects and Multiple Equilibria in the Risky Behavior of Friends , 2011, Review of Economics and Statistics.

[19]  Á. D. Paula.  Inference in a Synchronization Game with Social Interactions, Second Version , 2008 .

[20]  Timothy C. Reluga,et al.  Long-standing influenza vaccination policy is in accord with individual self-interest but not with the utilitarian optimum , 2007, Proceedings of the National Academy of Sciences.

[21]  Bo E. Honoré,et al.  Interdependent Durations , 2008 .

[22]  Bruce I. Sacerdote,et al.  Katrina's Children: Evidence on the Structure of Peer Effects from Hurricane Evacuees. NBER Working Paper No. 15291. , 2009 .

[23]  Steven N. Durlauf,et al.  Linear Social Interactions Models , 2013, Journal of Political Economy.

[24]  Bryan S. Graham,et al.  Identifying Social Interactions Through Conditional Variance Restrictions , 2008 .

[25]  P. Grieco.  Discrete Games with Flexible Information Structures: An Application to Local Grocery Markets , 2011 .

[26]  Natalia Lazzati.  Treatment response with social interactions: Partial identification via monotone comparative statics , 2015 .

[27]  Colin Camerer,et al.  A Cognitive Hierarchy Model of Games , 2004 .

[28]  William A. Brock,et al.  Discrete Choice with Social Interactions , 2001 .

[29]  M. Kremer,et al.  Peer Effects and Alcohol Use Among College Students , 2003 .

[30]  Bryan S. Graham,et al.  Identification and estimation of the linear-in-means model of social interactions , 2005 .

[31]  Aureo de Paula,et al.  Econometrics of network models , 2015 .

[32]  Identification of Social Interactions , 2011 .

[33]  Brendan Kline.  Identification of complete information games , 2015 .

[34]  Bo E. Honoré,et al.  Interdependent Durations in Joint Retirement , 2011 .

[35]  Haiqing Xu,et al.  Social Interactions in Large Networks: A Game Theoretic Approach , 2016, ArXiv.

[36]  Colin Camerer.  Behavioral Game Theory: Experiments in Strategic Interaction , 2003 .

[37]  Elie Tamer,et al.  Bounds for best response functions in binary games , 2012 .

[38]  C. Bauch,et al.  Rapid Emergence of Free-Riding Behavior in New Pediatric Immunization Programs , 2010, PloS one.

[39]  David Pearce.  Rationalizable Strategic Behavior and the Problem of Perfection , 1984 .

[40]  C. Manski.  Identification of Endogenous Social Effects: The Reflection Problem , 1993 .

[41]  R. McKelvey,et al.  Quantal Response Equilibria for Normal Form Games , 1995 .

[42]  A new model for interdependent durations , 2018 .

[43]  Andres Aradillas-Lopez,et al.  Semiparametric estimation of a simultaneous game with incomplete information , 2010 .

[44]  Steven T. Berry,et al.  Identification in Models of Oligopoly Entry ∗ , 2006 .

[45]  J. Angrist,et al.  Identification and Estimation of Local Average Treatment Effects , 1995 .

[46]  Comment , 2013 .

[47]  Giacomo De Giorgi,et al.  Identification of Social Interactions through Partially Overlapping Peer Groups , 2010 .

[48]  Brendan Kline,et al.  An empirical model of non‐equilibrium behavior in games , 2018 .

[49]  Concave-monotone treatment response and monotone treatment selection: With an application to the returns to schooling: Treatment response and selection , 2014 .

[50]  Hana Ross,et al.  The importance of peer effects, cigarette prices and tobacco control policies for youth smoking behavior. , 2005, Journal of health economics.

[51]  C. Manski,et al.  More on Monotone Instrumental Variables , 2009 .

[52]  B. Bernheim.  Rationalizable Strategic Behavior , 1984 .

[53]  Y. Zenou,et al.  Endogenous peer effects: local aggregate or local average? , 2014 .

[54]  Matthew A. Masten.  Random Coefficients on Endogenous Variables in Simultaneous Equations Models , 2014 .

[55]  Andrés Aradillas-López.  Pairwise-difference estimation of incomplete information games , 2012 .

[56]  D. Earn,et al.  Group interest versus self-interest in smallpox vaccination policy , 2003, Proceedings of the National Academy of Sciences of the United States of America.

[57]  Timothy F. Bresnahan,et al.  Empirical models of discrete games , 1991 .

[58]  E. Tamer,et al.  Market Structure and Multiple Equilibria in Airline Markets , 2009 .

[59]  James E. West,et al.  From Natural Variation to Optimal Policy? the Importance of Endogenous Peer Group Formation * 1 Data 1.1 the Dataset 2 Experimental Design and Sorting Methodology , 2022 .

[60]  Charles F. Manski,et al.  Identification of Treatment Response with Social Interactions , 2013 .

[61]  C. Manski,et al.  Monotone Instrumental Variables with an Application to the Returns to Schooling , 1998 .

[62]  Brendan Kline.  The empirical content of games with bounded regressors , 2016 .

[63]  Laurent Davezies,et al.  Identification of Peer Effects Using Group Size Variation , 2006, SSRN Electronic Journal.

[64]  Dennis Epple,et al.  Peer Effects in Education: A Survey of the Theory and Evidence , 2011 .

[65]  Xun Tang.  Estimating Simultaneous Games with Incomplete Information Under Median Restrictions , 2009 .

[66]  A. Lewbel,et al.  Identification and estimation of games with incomplete information using excluded regressors , 2015 .

[67]  I. Molchanov,et al.  Sharp identification regions in models with convex moment predictions , 2010 .

[68]  Miguel A. Costa-Gomes,et al.  Cognition and Behavior in Two-Person Guessing Games: An Experimental Study , 2003 .

[69]  Han Hong,et al.  Identification and Estimation of a Discrete Game of Complete Information , 2010 .

[70]  E. Vytlacil.  Independence, Monotonicity, and Latent Index Models: An Equivalence Result , 2002 .

[71]  Bernard Fortin,et al.  Identification of Peer Effects through Social Networks , 2007, SSRN Electronic Journal.

[72]  D. Earn,et al.  Vaccination and the theory of games. , 2004, Proceedings of the National Academy of Sciences of the United States of America.

[73]  R. Moffitt.  Policy Interventions, Low-Level Equilibria, and So-cial Interactions , 1999 .

[74]  B. Graham.  Methods of Identification in Social Networks , 2014 .

[75]  Lung-fei Lee,et al.  Identification and estimation of econometric models with group interactions, contextual factors and fixed effects , 2007 .

[76]  M. Kremer.  Integrating Behavioral Choice into Epidemiological Models of AIDS , 1996 .

[77]  Steven N. Durlauf,et al.  Identification of binary choice models with social interactions , 2007 .

[78]  Elie Tamer,et al.  The Identification Power of Equilibrium in Simple Games , 2008 .

[79]  Elie Tamer,et al.  Bayesian inference in a class of partially identified models , 2016 .

[80]  Adriaan R. Soetevent,et al.  A discrete-choice model with social interactions: with an application to high school teen behavior , 2007 .