Estimating the Neighborhood Influence on Decision Makers: Theory and an Application on the Analysis of Innovation Decisions
AbstractWhen making decisions, agents tend to make use of decisions others have made in similar situations. Ignoring this behavior in empirical models can be interpreted as a problem of omitted variables and may seriously bias parameter estimates and harm inference. We suggest a possibility of integrating such outside in uences into models of discrete choice decisions by defining an abstract space in which agents with similar characteristics are neighbors who possibly in uence each other. In order to correct for correlations between the characteristics, the design of this space allows for nonorthogonality of its dimensions. Several Monte Carlo simulations show the small sample properties of spatial models with binary choice. When applying the estimator to innovation decisions data of German firms, we find evidence for the existence of neighborhood effects.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Center of Finance and Econometrics, University of Konstanz in its series CoFE Discussion Paper with number 01-04.
Length: 23 Pages
Date of creation: Jun 2001
Date of revision:
Other versions of this item:
- Hautsch, Nikolaus & Klotz, Stefan, 2003. "Estimating the neighborhood influence on decision makers: theory and an application on the analysis of innovation decisions," Journal of Economic Behavior & Organization, Elsevier, vol. 52(1), pages 97-113, September.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Manski, Charles F, 1993.
"Identification of Endogenous Social Effects: The Reflection Problem,"
Review of Economic Studies,
Wiley Blackwell, vol. 60(3), pages 531-42, July.
- Poirier, Dale J. & Ruud, Paul A., 1987.
"Probit with Dependent Obervations,"
Department of Economics, Working Paper Series
qt04f5m9t2, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Brock,W.A. & Durlauf,S.N., 2000.
"Discrete choice with social interactions,"
7, Wisconsin Madison - Social Systems.
- Bernheim, B Douglas, 1994. "A Theory of Conformity," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 841-77, October.
- Baptista, Rui, 2000. "Do innovations diffuse faster within geographical clusters?," International Journal of Industrial Organization, Elsevier, vol. 18(3), pages 515-535, April.
- Charles F. Manski, 2000.
"Economic Analysis of Social Interactions,"
Journal of Economic Perspectives,
American Economic Association, vol. 14(3), pages 115-136, Summer.
- Case, A.C. & Katz, L.F., 1991.
"The Company You Keep: The Effects Of Family And Neighborhood On Disadvantaged Younths,"
Harvard Institute of Economic Research Working Papers
1555, Harvard - Institute of Economic Research.
- Anne C. Case & Lawrence F. Katz, 1991. "The Company You Keep: The Effects of Family and Neighborhood on Disadvantaged Youths," NBER Working Papers 3705, National Bureau of Economic Research, Inc.
- Scharfstein, David. & Stein, Jeremy C., 1988.
"Herd behavior and investment,"
WP 2062-88., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-40, June.
- Licht, Georg & Harhoff, Dietmar, 1993. "Das Mannheimer Innovationspanel," ZEW Discussion Papers 93-21, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Case, Anne, 1992. "Neighborhood influence and technological change," Regional Science and Urban Economics, Elsevier, vol. 22(3), pages 491-508, September.
- Pinkse, Joris & Slade, Margaret E., 1998. "Contracting in space: An application of spatial statistics to discrete-choice models," Journal of Econometrics, Elsevier, vol. 85(1), pages 125-154, July.
- Akerlof, George A & Yellen, Janet L, 1990. "The Fair Wage-Effort Hypothesis and Unemployment," The Quarterly Journal of Economics, MIT Press, vol. 105(2), pages 255-83, May.
- George A. Akerlof, 1997. "Social Distance and Social Decisions," Econometrica, Econometric Society, vol. 65(5), pages 1005-1028, September.
- Théophile Azomahou, 2001. "GMM Estimation of Lattice Models Using Panel Data: Application," Working Papers of BETA 2001-09, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
- Rincke, Johannes, 2005. "Policy Innovation in Local Jurisdictions: Testing the Neighborhood Influence Against the Free-Riding Hypothesis," ZEW Discussion Papers 05-08, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Johannes Rincke, 2005. "Policy Innovation in Local Jurisdictions: Testing the Neighborhood Influence Against the Free-Riding Hypothesis," Public Economics 0511017, EconWPA.
- Johannes Rincke, 2005. "Policy Innovation in Local Jurisdictions: Testing the Neighborhood Influence Against the Free-Riding Hypothesis," Public Economics 0511009, EconWPA.
- Théophile AZOMAHOU, 2001. "Efficient Estimation of Spatial Autoregressive Models," Working Papers of BETA 2001-05, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
- Théophile AZOMAHOU, 1999. "Estimation of Spatial Panel Data Models Using a Minimum Distance Estimator: Application," Working Papers of BETA 9912, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
- Johannes Rincke, 2006. "Policy innovation in local jurisdictions: Testing for neighborhood influence in school choice policies," Public Choice, Springer, vol. 129(1), pages 189-200, October.
- Edoardo Di Porto & Federico Revelli, 2009.
"Central command, local hazard and the race to the top,"
2009/26, Institut d'Economia de Barcelona (IEB).
- Di Porto Edoardo & Revelli Federico, 2009. "Central Command, Local Hazard and the Race to the Top," Department of Economics and Statistics Cognetti de Martiis. Working Papers 200909, University of Turin.
- Rincke, Johannes, 2005. "Neighborhood Influence and Political Change: Evidence from US School Districts," ZEW Discussion Papers 05-16, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Johannes Rincke, 2005. "Neighborhood Influence and Political Change: Evidence from US School Districts," Public Economics 0511011, EconWPA.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ingmar Nolte) The email address of this maintainer does not seem to be valid anymore. Please ask Ingmar Nolte to update the entry or send us the correct address.
If references are entirely missing, you can add them using this form.