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Social Interactions: A Game Theoretic Approach

  • Haiqing Xu


    (Department of Economics, Texas University)

This paper uses a game theoretic model to capture the interactions among individuals within a social network, and establishes nonparametric identification and inference on the game structural model. Consider observations from a single equilibrium of a network game in which each player chooses an action from a finite set and is subject to interactions that are local --- the interactions only occur among friends. All observations are potentially dependent on each other because they are interpreted as arising from a single equilibrium of settings where players interact directly or indirectly. Simple assumptions about the structure are made that ensure that the game has a unique equilibrium and the equilibrium has a stability property. The formulation of this stability property is new and serves as the basis for statistical inference. I establish the identification of the structural model and introduce an estimation procedure called (sieve) maximum approximated likelihood.

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Paper provided by The University of Texas at Austin, Department of Economics in its series Department of Economics Working Papers with number 130914.

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Length: 44 pages
Date of creation: Nov 2010
Date of revision:
Handle: RePEc:tex:wpaper:130914
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  1. Carlsson, Hans & van Damme, Eric, 1993. "Global Games and Equilibrium Selection," Econometrica, Econometric Society, vol. 61(5), pages 989-1018, September.
  2. Bresnahan, Timothy F, 1987. "Competition and Collusion in the American Automobile Industry: The 1955 Price War," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 457-82, June.
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  5. Katja Seim, 2006. "An empirical model of firm entry with endogenous productÔÇÉtype choices," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 619-640, 09.
  6. Chen, Xiaohong, 2007. "Large Sample Sieve Estimation of Semi-Nonparametric Models," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 6, chapter 76 Elsevier.
  7. Pesendorfer, Martin & Schmidt-Dengler, Philipp, 2003. "Identification and Estimation of Dynamic Games," CEPR Discussion Papers 3965, C.E.P.R. Discussion Papers.
  8. Robinson, Peter M, 1988. "Root- N-Consistent Semiparametric Regression," Econometrica, Econometric Society, vol. 56(4), pages 931-54, July.
  9. Ryo Nakajima, 2004. "Measuring Peer Effects on Youth Smoking Behavior," ISER Discussion Paper 0600, Institute of Social and Economic Research, Osaka University.
  10. Elie Tamer, 2003. "Incomplete Simultaneous Discrete Response Model with Multiple Equilibria," Review of Economic Studies, Wiley Blackwell, vol. 70(1), pages 147-165, January.
  11. Bajari, Patrick & Hong, Han & Krainer, John & Nekipelov, Denis, 2010. "Estimating Static Models of Strategic Interactions," Journal of Business & Economic Statistics, American Statistical Association, vol. 28(4), pages 469-482.
  12. Klier, Thomas & McMillen, Daniel P, 2008. "Clustering of Auto Supplier Plants in the United States," Journal of Business & Economic Statistics, American Statistical Association, vol. 26, pages 460-471.
  13. Pinkse, Joris & Slade, Margaret E., 1998. "Contracting in space: An application of spatial statistics to discrete-choice models," Journal of Econometrics, Elsevier, vol. 85(1), pages 125-154, July.
  14. Joris Pinkse & Margaret Slade, 2007. "Semi-structural models of advertising competition," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(7), pages 1227-1246.
  15. Elie Tamer, 2003. "Incomplete Simultaneous Discrete Response Model with Multiple Equilibria," Review of Economic Studies, Oxford University Press, vol. 70(1), pages 147-165.
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