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Nonparametric identification in index models of link formation

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  • Gao, Wayne Yuan

Abstract

We consider a dyadic link formation model with a homophily effect index and a degree heterogeneity index. We provide nonparametric identification results for the potentially nonparametric homophily effect function, the realizations of unobserved individual fixed effects and the unknown distribution of idiosyncratic shocks, up to normalization. We propose a novel form of scale normalization on an arbitrary interquantile range, which is not only theoretically general but also proves particularly convenient for the identification analysis. We then use an inductive “in-fill and out-expansion” algorithm to establish our main results.

Suggested Citation

  • Gao, Wayne Yuan, 2020. "Nonparametric identification in index models of link formation," Journal of Econometrics, Elsevier, vol. 215(2), pages 399-413.
    • Handle: RePEc:eee:econom:v:215:y:2020:i:2:p:399-413
    DOI: 10.1016/j.jeconom.2019.09.005
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    Citations

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    Cited by:

    1. Luis E. Candelaria, 2020. "A Semiparametric Network Formation Model with Unobserved Linear Heterogeneity," Papers 2007.05403, arXiv.org, revised Aug 2020.
    2. Candelaria, Luis E., 2020. "A Semiparametric Network Formation Model with Unobserved Linear Heterogeneity," The Warwick Economics Research Paper Series (TWERPS) 1279, University of Warwick, Department of Economics.
    3. David W. Hughes, 2021. "Estimating Nonlinear Network Data Models with Fixed Effects," Boston College Working Papers in Economics 1058, Boston College Department of Economics.
    4. Gao, Wayne Yuan & Li, Ming & Xu, Sheng, 2023. "Logical differencing in dyadic network formation models with nontransferable utilities," Journal of Econometrics, Elsevier, vol. 235(1), pages 302-324.
    5. Mugnier, Martin & Wang, Ao, 2022. "Identification and (Fast) Estimation of Large Nonlinear Panel Models with Two-Way Fixed Effects," The Warwick Economics Research Paper Series (TWERPS) 1422, University of Warwick, Department of Economics.
    6. Candelaria, Luis E. & Ura, Takuya, 2023. "Identification and inference of network formation games with misclassified links," Journal of Econometrics, Elsevier, vol. 235(2), pages 862-891.
    7. Alejandro Sanchez-Becerra, 2022. "The Network Propensity Score: Spillovers, Homophily, and Selection into Treatment," Papers 2209.14391, arXiv.org.

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    More about this item

    Keywords

    Network formation; Homophily; Degree heterogeneity; Nonparametric identification; Interquantile range;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • 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
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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