My Friend Far Far Away: Asymptotic Properties of Pairwise Stable Networks
AbstractWe explore the asymptotic properties of pairwise stables networks (Jackson and Wolinsky, 1996). Speci fically, we want to recover a set of parameters from the individuals' utility functions using the observation of a single pairwise stable network. We develop Pseudo Maximum Likelihood estimator and show that it is consistent and asymptotically normally distributed under a very weak version of homophily. The approach is compelling as it provides explicit, easy-to-check conditions on the admissible set of preferences. Moreover, the method is easily implementable using pre-programmed estimators available in most statistical packages. We provide an application of our method using the Add Health database.
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Bibliographic InfoPaper provided by University of Toronto, Department of Economics in its series Working Papers with number tecipa-499.
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Date of creation: 01 Oct 2013
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social network; pairwise stability; spatial econometrics;
Find related papers by JEL classification:
- C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
- D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-10-05 (All new papers)
- NEP-ECM-2013-10-05 (Econometrics)
- NEP-GTH-2013-10-05 (Game Theory)
- NEP-NET-2013-10-05 (Network Economics)
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