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Estimation of a local-aggregate network model with sampled networks

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Author Info

  • Liu, Xiaodong

Abstract

This work considers the estimation of a network model with sampled networks. Chandrasekhar and Lewis (2011) show that the estimation with sampled networks could be biased due to measurement error induced by sampling and propose a bias correction by restricting the estimation to sampled nodes to avoid measurement error in the regressors. However, measurement error may still exist in the instruments and thus induce the weak instrument problem when the sampling rate is low. For a local-aggregate model, we show that the instrument based on the outdegrees of sampled nodes is free of measurement error and thus remains informative even if the sampling rate is low. Simulation studies suggest that the 2SLS estimator with the proposed instrument works well when the sampling rate is low and the other instruments are weak.

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File URL: http://www.sciencedirect.com/science/article/pii/S0165176512005903
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Bibliographic Info

Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 118 (2013)
Issue (Month): 1 ()
Pages: 243-246

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Handle: RePEc:eee:ecolet:v:118:y:2013:i:1:p:243-246

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Web page: http://www.elsevier.com/locate/ecolet

Related research

Keywords: Social networks; Local-average models; Local-aggregate models; Sampling of networks; Weak instruments;

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References

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  1. Manski, C.F., 1991. "Identification of Endogenous Social Effects: the Reflection Problem," Working papers 9127, Wisconsin Madison - Social Systems.
  2. Bramoullé, Yann & Djebbari, Habiba & Fortin, Bernard, 2009. "Identification of peer effects through social networks," Journal of Econometrics, Elsevier, vol. 150(1), pages 41-55, May.
  3. Liu, Xiaodong & Lee, Lung-fei, 2010. "GMM estimation of social interaction models with centrality," Journal of Econometrics, Elsevier, vol. 159(1), pages 99-115, November.
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Cited by:
  1. Michael D. Koenig & Xiaodong Liu & Yves Zenou, 2014. "R&D Networks: Theory, Empirics and Policy Implications," Discussion Papers 13-027, Stanford Institute for Economic Policy Research.

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