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My Friend Far Far Away: Asymptotic Properties of Pairwise Stable Networks

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  • Vincent BOUCHER
  • Ismael MOURIFIÉ

Abstract

We explore the asymptotic properties of pairwise stables networks (Jackson and Wolinsky, 1996). Speci fically, we want to recover a set of parameters from the individuals' utility functions using the observation of a single pairwise stable network. We develop Pseudo Maximum Likelihood estimator and show that it is consistent and asymptotically normally distributed under a very weak version of homophily. The approach is compelling as it provides explicit, easy-to-check conditions on the admissible set of preferences. Moreover, the method is easily implementable using pre-programmed estimators available in most statistical packages. We provide an application of our method using the Add Health database.

Suggested Citation

  • Vincent BOUCHER & Ismael MOURIFIÉ, 2013. "My Friend Far Far Away: Asymptotic Properties of Pairwise Stable Networks," Working Papers tecipa-499, University of Toronto, Department of Economics.
    • Handle: RePEc:tor:tecipa:tecipa-499
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    References listed on IDEAS

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    6. Alberto Bisin & Andrea Moro & Giorgio Topa, 2011. "The Empirical Content of Models with Multiple Equilibria in Economies with Social Interactions," NBER Working Papers 17196, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Gagliardini, Patrick & Gouriéroux, Christian, 2017. "Double instrumental variable estimation of interaction models with big data," Journal of Econometrics, Elsevier, vol. 201(2), pages 176-197.
    2. à ureo de Paula & Seth Richards†Shubik & Elie Tamer, 2018. "Identifying Preferences in Networks With Bounded Degree," Econometrica, Econometric Society, vol. 86(1), pages 263-288, January.
    3. Boucher, Vincent, 2016. "Conformism and self-selection in social networks," Journal of Public Economics, Elsevier, vol. 136(C), pages 30-44.
    4. Áureo de Paula, 2015. "Econometrics of network models," CeMMAP working papers CWP52/15, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    5. Arun Advani & Bansi Malde, 2014. "Empirical methods for networks data: social effects, network formation and measurement error," IFS Working Papers W14/34, Institute for Fiscal Studies.
    6. Leung, Michael P., 2015. "Two-step estimation of network-formation models with incomplete information," Journal of Econometrics, Elsevier, vol. 188(1), pages 182-195.

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    More about this item

    Keywords

    social network; pairwise stability; spatial econometrics;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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