Resolving the Identification Problem in Linear Social Interactions Models: Modeling with Between-Group Spillovers
AbstractThe linear-in-means model has been a theoretical and empirical workhorse of the social interactions field. As was noted by Manski (1993), the collinearity between group-level 'contextual' and 'endogenous' effects leads to an inability to identify the structural parameters of this model. Manski called this the 'reflection' problem. This paper suggests that Manksi’s reflection problem is unique to a special case of a more general context in which agents care about multiple reference groups. Specifically, the identification problem is resolved through a model generalization to include between-group and within-group effects.
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Length: 23 pages
Date of creation: 03 Jan 2005
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Social Interactions; Identification; Linear-in- Means Model;
Find related papers by JEL classification:
- 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
- D10 - Microeconomics - - Household Behavior - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-01-09 (All new papers)
- NEP-ECM-2005-01-09 (Econometrics)
- NEP-NET-2005-01-09 (Network Economics)
- NEP-URE-2005-01-09 (Urban & Real Estate Economics)
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