Approximate variational inference for a model of social interactions
This paper proposes approximate variational inference methods for estimation of a strategic model of social interactions. Players interact in an exogenous network and sequentially choose a binary action. The utility of an action is a function of the choices of neighbors in the network. I prove that the interaction process can be represented as a potential game and it converges to a unique stationary equilibrium distribution. However, exact inference for this model is infeasible because of a computationally intractable likelihood, which cannot be evaluated even when there are few players. To overcome this problem, I propose variational approximations for the likelihood that allow approximate inference. This technique can be applied to any discrete exponential family, and therefore it is a general tool for inference in models with a large number of players. The methodology is illustrated with several simulated datasets and compared with MCMC methods.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Angelo Mele, 2010.
"A Structural Model of Segregation in Social Networks,"
10-16, NET Institute.
- Angelo Mele, 2010. "A structural model of segregation in social networks," CeMMAP working papers CWP32/10, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
- L. Blume, 2010.
"The Statistical Mechanics of Strategic Interaction,"
Levine's Working Paper Archive
488, David K. Levine.
- Blume Lawrence E., 1993. "The Statistical Mechanics of Strategic Interaction," Games and Economic Behavior, Elsevier, vol. 5(3), pages 387-424, July.
- Ryo Nakajima, 2007.
"Measuring Peer Effects on Youth Smoking Behaviour,"
Review of Economic Studies,
Oxford University Press, vol. 74(3), pages 897-935.
- Ormerod, J. T. & Wand, M. P., 2010. "Explaining Variational Approximations," The American Statistician, American Statistical Association, vol. 64(2), pages 140-153.
- Braun, Michael & McAuliffe, Jon, 2010. "Variational Inference for Large-Scale Models of Discrete Choice," Journal of the American Statistical Association, American Statistical Association, vol. 105(489), pages 324-335.
When requesting a correction, please mention this item's handle: RePEc:net:wpaper:1316. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Nicholas Economides)
If references are entirely missing, you can add them using this form.