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Structural Homophily

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  • Vincent Boucher

    (CIREQ - Centre interuniversitaire de recherche en économie quantitative)

Abstract

Homophily, or the fact that similar individuals tend to interact with each other, is a prominent feature of economic and social networks. Most existing theories of homophily are based on a descriptive approach and abstract away from equilibrium considerations. I show that the equilibrium structure of homophily has empirical power, as it can be used to recover underlying preference parameters. I build a non-cooperative model of network formation, which produces a unique, empirically realistic equilibrium network. Individuals have homophilic preferences and face capacity constraints on the number of links. I develop a novel empirical method, based on the shape of the equilibrium network, which allows for the identification and estimation of the underlying homophilic preferences. I apply this new methodology to race-based choices regarding friendship decisions among American teenagers.

Suggested Citation

  • Vincent Boucher, 2012. "Structural Homophily," Working Papers hal-00720825, HAL.
  • Handle: RePEc:hal:wpaper:hal-00720825
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00720825
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    References listed on IDEAS

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    Cited by:

    1. Simon Clark, 2020. ""You're Just My Type!" Matching and Payoffs When Like Attracts Like," Edinburgh School of Economics Discussion Paper Series 295, Edinburgh School of Economics, University of Edinburgh.
    2. Schulz, Jan & Mayerhoffer, Daniel M., 2021. "A network approach to consumption," BERG Working Paper Series 173, Bamberg University, Bamberg Economic Research Group.
    3. Vincent Boucher & Bernard Fortin, 2015. "Some Challenges in the Empirics of the Effects of Networks," Cahiers de recherche 1504, CIRPEE.
    4. Jimenez Martínez, Antonio & Melguizo Lopez, Isabel, 2022. "Making friends: the role of assortative interests and capacity constraints," MPRA Paper 115174, University Library of Munich, Germany, revised 08 Jul 2022.
    5. Boucher, Vincent & Tumen, Semih & Vlassopoulos, Michael & Wahba, Jackline & Zenou, Yves, 2021. "Ethnic Mixing in Early Childhood: Evidence from a Randomized Field Experiment and a Structural Model," IZA Discussion Papers 14260, Institute of Labor Economics (IZA).
    6. Michael Foley & Rory Smead & Patrick Forber & Christoph Riedl, 2021. "Avoiding the bullies: The resilience of cooperation among unequals," PLOS Computational Biology, Public Library of Science, vol. 17(4), pages 1-18, April.
    7. Bolletta, Ugo, 2021. "A model of peer effects in school," Mathematical Social Sciences, Elsevier, vol. 114(C), pages 1-10.

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