Estimation of Peer Effects in Endogenous Social Networks: Control Function Approach

Abstract We propose methods 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, estimate the model using a sieve semiparametric approach and establish asymptotics of the semiparametric estimator.

• Publication year

  2017

• Venue

  Review of Economics and Statistics

• Publication date

  2017-09-28

• Fields of study

  Sociology, Computer Science, Economics

• Identifiers
  DOI 10.1162/rest_a_00870arXiv 1709.10024
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

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