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Testing Unilateral and Bilateral Link Formation

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  • Marcel Fafchamps
  • Margherita Comola

Abstract

The literature has shown that network architecture depends crucially on whether links are formed unilaterally or bilaterally, that is, on whether the consent of both nodes is required for a link to be formed.� We propose a test of whether network data is best seen as an actual link or willingness to link and, in the latter case, whether this link is generated by an unilateral or bilateral link formation process.� We illustrate this test using survey answers to a risk-sharing question in Tanzania.� We find that the bilateral link formation model fits the data better than the unilateral model, but the data are best interpreted as willingness to link rather than an actual link.� We then expand the model to include self-censoring and find that models with self-censoring fit the data best.

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Bibliographic Info

Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number CSAE WPS/2009-13.

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Date of creation: 01 Jul 2009
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Handle: RePEc:oxf:wpaper:csae-wps/2009-13

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Keywords: Network architecture; Pairwise stability; Risk sharing;

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References

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Cited by:
  1. Margherita Comola & Marcel Fafchamps, 2010. "Are gifts and loans between households voluntary?," PSE Working Papers halshs-00564894, HAL.
  2. Landmann, Andreas & Vollan, Björn & Frölich, Markus, 2011. "Saving, Microinsurance: Why You Should Do Both or Nothing. A Behavioral Experiment on the Philippines," Proceedings of the German Development Economics Conference, Berlin 2011 51, Verein für Socialpolitik, Research Committee Development Economics.
  3. Yann Bramoullé & Bernard Fortin, 2009. "The Econometrics of Social Networks," Cahiers de recherche 0913, CIRPEE.

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