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Testing Unilateral and Bilateral Link Formation

  • Marcel Fafchamps
  • Margherita Comola

The literature has shown that network architecture depends crucially on whether links are formed unilaterally or bilaterally, that is, on whether the consent of both nodes is required for a link to be formed.� We propose a test of whether network data is best seen as an actual link or willingness to link and, in the latter case, whether this link is generated by an unilateral or bilateral link formation process.� We illustrate this test using survey answers to a risk-sharing question in Tanzania.� We find that the bilateral link formation model fits the data better than the unilateral model, but the data are best interpreted as willingness to link rather than an actual link.� We then expand the model to include self-censoring and find that models with self-censoring fit the data best.

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File URL: http://www.csae.ox.ac.uk/workingpapers/pdfs/2009-13text.pdf
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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number CSAE WPS/2009-13.

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Date of creation: 01 Jul 2009
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Handle: RePEc:oxf:wpaper:csae-wps/2009-13
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  1. Guenter Hitsch & Ali Hortacsu, 2005. "What Makes You Click? An Empirical Analysis of Online Dating," 2005 Meeting Papers 207, Society for Economic Dynamics.
  2. Anderson, K.S. & Baland, J-M., 2000. "The Economics of Roscas and Intra-Household Resource Allocation," Discussion Paper 2000-83, Tilburg University, Center for Economic Research.
  3. Conley, T. G., 1999. "GMM estimation with cross sectional dependence," Journal of Econometrics, Elsevier, vol. 92(1), pages 1-45, September.
  4. Marcel Fafchamps & Flore Gubert, 2005. "The Formation of Risk Sharing Networks," Economics Series Working Papers GPRG-WPS-037, University of Oxford, Department of Economics.
  5. Marcel Fafchamps & Susan Lund, 2000. "Risk-Sharing Networks in Rural Philippines," Economics Series Working Papers 10, University of Oxford, Department of Economics.
  6. Michele Belot & Marco Francesconi, 2006. "Can Anyone be "The" One? Evidence on Mate Selection from Speed Dating," Economics Discussion Papers 620, University of Essex, Department of Economics.
  7. Platteau, J.P., 1996. "Traditional Sharing Norms as an Obstacle to Economic Growth in Tribal Societies," Papers 173, Notre-Dame de la Paix, Sciences Economiques et Sociales.
  8. Stefan Dercon & Joachim De Weerdt, 2002. "Risk-sharing networks and insurance against illness," CSAE Working Paper Series 2002-16, Centre for the Study of African Economies, University of Oxford.
  9. Abigail Barr & Marleen Dekker, 2008. "Risk Sharing Relations and Enforcement Mechanisms," Economics Series Working Papers WPS/2008-14, University of Oxford, Department of Economics.
  10. Poirier, Dale J., 1980. "Partial observability in bivariate probit models," Journal of Econometrics, Elsevier, vol. 12(2), pages 209-217, February.
  11. Abigail Barr & Mattea Stein, 2008. "Status and egalitarianism in traditional communities: An analysis of funeral attendance in six Zimbabwean villages," CSAE Working Paper Series 2008-26, Centre for the Study of African Economies, University of Oxford.
  12. COMOLA Margherita, 2007. "The network structure of informal arrangements : evidence from rural Tanzania," Research Unit Working Papers 0708, Laboratoire d'Economie Appliquee, INRA.
  13. Arcand, Jean-Louis & Fafchamps, Marcel, 2012. "Matching in community-based organizations," Journal of Development Economics, Elsevier, vol. 98(2), pages 203-219.
  14. Jean-Paul Azam & Flore Gubert, 2006. "Migrants' Remittances and the Household in Africa: A Review of Evidence," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 15(2), pages 426-462, December.
  15. Bester, C. Alan & Conley, Timothy G. & Hansen, Christian B., 2011. "Inference with dependent data using cluster covariance estimators," Journal of Econometrics, Elsevier, vol. 165(2), pages 137-151.
  16. Garance Genicot & Debraj Ray, 2003. "Group Formation in Risk--Sharing Arrangements," Review of Economic Studies, Wiley Blackwell, vol. 70(1), pages 87-113, January.
  17. Siwan Anderson, 2000. "The Economics of Roscas and Intra-Household Resource Allocation," Econometric Society World Congress 2000 Contributed Papers 1323, Econometric Society.
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