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Peer effects and endogenous social interactions

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  • Koen Jochmans

Abstract

We introduce an approach to deal with self-selection of peers in the linear-in-means model. Contrary to the existing proposals we do not require to specify a model for how the selection of peers comes about. Rather, we exploit two restrictions that are inherent to many such specifications to construct intuitive instrumental variables. These restrictions are that link decisions that involve a given individual are not all independent of one another, but that they are independent of the link behavior between other pairs of individuals. A two-stage least-squares estimator of the linear-in-means model is then readily obtained.

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  • Koen Jochmans, 2020. "Peer effects and endogenous social interactions," Papers 2008.07886, arXiv.org.
  • Handle: RePEc:arx:papers:2008.07886
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    References listed on IDEAS

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    1. Yann Bramoullé & Habiba Djebbari & Bernard Fortin, 2020. "Peer Effects in Networks: A Survey," Annual Review of Economics, Annual Reviews, vol. 12(1), pages 603-629, August.
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    Cited by:

    1. Diemer, Andreas, 2022. "Endogenous peer effects in diverse friendship networks: Evidence from Swedish classrooms," Economics of Education Review, Elsevier, vol. 89(C).
    2. Tadao Hoshino, 2023. "Causal Interpretation of Linear Social Interaction Models with Endogenous Networks," Papers 2308.04276, arXiv.org, revised Oct 2023.
    3. Alexandra de Gendre & Nicolás Salamanca, 2020. "On the Mechanisms of Ability Peer Effects," Melbourne Institute Working Paper Series wp2020n19, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    4. Jochmans, Koen, 2023. "Many (Weak) Judges in Judge-Leniency Designs," TSE Working Papers 23-1481, Toulouse School of Economics (TSE).

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    More about this item

    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
    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation

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