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Measurement Error and Peer Effects in Networks

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  • Yann Bramoull'e
  • Sebastiaan Maes

Abstract

In many practical applications, only noisy proxies for the true regressors are available, which is commonly believed to induce an attenuation bias. In the linear-in-means model, however, estimated peer effects might be inflated, potentially leading to false positives. This paper shows that the asymptotic bias depends on the interplay between individual characteristics and network links and demonstrates how the network structure can facilitate identification without the need for additional external information. Based on these identification results, we present consistent GMM and 2SLS estimators that are easily implementable. Our results are illustrated by means of a Monte Carlo simulation.

Suggested Citation

  • Yann Bramoull'e & Sebastiaan Maes, 2026. "Measurement Error and Peer Effects in Networks," Papers 2608.00336, arXiv.org.
    • Handle: RePEc:arx:papers:2608.00336
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    File URL: https://arxiv.org/pdf/2608.00336
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