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Endogenous Network Production Functions with Selectivity

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We consider a production function model that transforms worker inputs into outputs through peer effect networks. The distinguishing features of this production model are that the network is formal and observable through worker scheduling, and selection into the network is done by a manager. We discuss identification and suggest a variety of estimation techniques. In particular, we tackle endogeneity issues arising from selection into groups and exposure to common group factors by employing a polychotomous Heckman-type selection correction. We illustrate our method using data from the Syracuse University Men’s Basketball team, where at any point in time the coach selects a lineup and the players interact strategically to win games.

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File URL: http://www.maxwell.syr.edu/uploadedFiles/cpr/publications/working_papers2/wp168.pdf
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Paper provided by Center for Policy Research, Maxwell School, Syracuse University in its series Center for Policy Research Working Papers with number 168.

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Length: 34 pages
Date of creation: May 2014
Handle: RePEc:max:cprwps:168
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