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Testing Unilateral and Bilateral Link Formation

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  • Margherita Comola
  • Marcel Fafchamps

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. They 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 o rbilateral link formation process. They illustrate this test using survey answers to a risk-sharing question inTanzania. They 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. They then expand the model to include self-censoring and find that models with self-censoring fit the data best. [Working Paper No. 236]
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Suggested Citation

  • Margherita Comola & Marcel Fafchamps, 2014. "Testing Unilateral and Bilateral Link Formation," Economic Journal, Royal Economic Society, vol. 124(579), pages 954-976, September.
  • Handle: RePEc:wly:econjl:v:124:y:2014:i:579:p:954-976
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    File URL: http://hdl.handle.net/10.1111/ecoj.2014.124.issue-579
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    References listed on IDEAS

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    1. De Weerdt, Joachim & Dercon, Stefan, 2006. "Risk-sharing networks and insurance against illness," Journal of Development Economics, Elsevier, vol. 81(2), pages 337-356, December.
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    5. Fafchamps, Marcel & Gubert, Flore, 2007. "The formation of risk sharing networks," Journal of Development Economics, Elsevier, pages 326-350.
    6. Belot, M & Francesconi, M, 2006. "Can Anyone be "The" One? Evidence on Mate Selection from Speed Dating," Economics Discussion Papers 2594, University of Essex, Department of Economics.
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    9. Abigail Barr & Marleen Dekker & Marcel Fafchamps, 2008. "Risk Sharing Relations and Enforcement Mechanisms," CSAE Working Paper Series 2008-14, Centre for the Study of African Economies, University of Oxford.
    10. Fafchamps, Marcel & Lund, Susan, 2003. "Risk-sharing networks in rural Philippines," Journal of Development Economics, Elsevier, pages 261-287.
    11. Poirier, Dale J., 1980. "Partial observability in bivariate probit models," Journal of Econometrics, Elsevier, vol. 12(2), pages 209-217, February.
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    14. Guenter Hitsch & Ali Hortacsu, 2005. "What Makes You Click? An Empirical Analysis of Online Dating," 2005 Meeting Papers 207, Society for Economic Dynamics.
    15. Garance Genicot & Debraj Ray, 2003. "Group Formation in Risk-Sharing Arrangements," Review of Economic Studies, Oxford University Press, vol. 70(1), pages 87-113.
    16. Arcand, Jean-Louis & Fafchamps, Marcel, 2012. "Matching in community-based organizations," Journal of Development Economics, Elsevier, vol. 98(2), pages 203-219.
    17. Bester, C. Alan & Conley, Timothy G. & Hansen, Christian B., 2011. "Inference with dependent data using cluster covariance estimators," Journal of Econometrics, Elsevier, vol. 165(2), pages 137-151.
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    Citations

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    Cited by:

    1. Norma Olaizola & Federico Valenciano, 2016. "From bilateral two-way to unilateral one-way flow link-formation," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 7(2), pages 257-278, June.
    2. Margherita Comola & Marcel Fafchamps, 2010. "Are gifts and loans between households voluntary?," PSE Working Papers halshs-00564894, HAL.
    3. repec:eee:jeborg:v:139:y:2017:i:c:p:1-25 is not listed on IDEAS
    4. Margherita Comola & Marcel Fafchamps, 2017. "The Missing Transfers: Estimating Misreporting in Dyadic Data," Economic Development and Cultural Change, University of Chicago Press, vol. 65(3), pages 549-582.
    5. Dzemski, Andreas, 2017. "An empirical model of dyadic link formation in a network with unobserved heterogeneity," Working Papers in Economics 698, University of Gothenburg, Department of Economics.
    6. Marcel Fafchamps & Julien Labonne, 2017. "Do Politicians’ Relatives Get Better Jobs? Evidence from Municipal Elections," Journal of Law, Economics, and Organization, Oxford University Press, vol. 33(2), pages 268-300.
    7. Comola, Margherita & Fafchamps, Marcel, 2014. "Estimating Mis-reporting in Dyadic Data: Are Transfers Mutually Beneficial?," IZA Discussion Papers 8664, Institute for the Study of Labor (IZA).
    8. Rapallini, Chiara & Rustichini, Aldo, 2016. "Elective affinities matter as much as ethnicity in multi-ethnic schools," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PA), pages 243-262.
    9. Margherita Comola & Mariapia Mendola, 2013. "The Formation of Migrant Networks," Development Working Papers 353, Centro Studi Luca d'Agliano, University of Milano.
    10. Joost Vandenbossche & Thomas Demuynck, 2013. "Network Formation with Heterogeneous Agents and Absolute Friction," Computational Economics, Springer;Society for Computational Economics, vol. 42(1), pages 23-45, June.
    11. d'Exelle, Ben & Riedl, Arno, 2016. "Gender differences and social ties effects in resource sharing," Research Memorandum 023, Maastricht University, Graduate School of Business and Economics (GSBE).
    12. Comola, Margherita & Prina, Silvia, 2014. "Do Interventions Change the Network? A Panel Peer-Effect Model Accounting for Endogenous Network Changes," IZA Discussion Papers 8641, Institute for the Study of Labor (IZA).
    13. Yann Bramoullé & Bernard Fortin, 2009. "The Econometrics of Social Networks," Cahiers de recherche 0913, CIRPEE.
    14. repec:beh:jbepv1:v:1:y:2017:i:1:p:33-39 is not listed on IDEAS
    15. 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.

    More about this item

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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