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Endogenous peer effects: local aggregate or local average?

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  • Liu, Xiaodong
  • Patacchini, Eleonora
  • Zenou, Yves

Abstract

We develop a unified model embedding different behavioral mechanisms of social interactions and design a statistical model selection test to differentiate between them in empirical applications. This framework is applied to study peer effects in education (effort in studying) and sport activities for adolescents in the United States. We find that, for education, students tend to conform to the social norm of their friends while, for sport activities, both the social multiplier and the social norm effect matter.

Suggested Citation

  • Liu, Xiaodong & Patacchini, Eleonora & Zenou, Yves, 2014. "Endogenous peer effects: local aggregate or local average?," Journal of Economic Behavior & Organization, Elsevier, vol. 103(C), pages 39-59.
    • Handle: RePEc:eee:jeborg:v:103:y:2014:i:c:p:39-59
    DOI: 10.1016/j.jebo.2014.03.025
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    More about this item

    Keywords

    Social networks; Identification of peer effects; J test; Individual-based policy; Group-based policy;
    All these keywords.

    JEL classification:

    • A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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