A deeper understanding of the relation between individual behavior and individual actions on one hand and the embeddedness of individuals in social structures on the other hand can be obtained by empirically studying the dynamics of individual outcomes and network structure, and how these mutually affect each other. In methodological terms, this means that behavior of individuals -indicators of performance and success, attitudes and other cognitions, behavioral tendencies -and the ties between them are studied as a social process evolving over time, where behavior and network ties mutually influence each other. We propose a statistical methodology for this type of investigation and illustrate it by an example. * We thank the Chief Scientists Office of the Scottish Home and Health Department for permission to use the data of the Teenage Friends and Lifestyle Study.

Multilevel analysis, hierarchical linear model, random coefficients,

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Bayesian and empirical Bayesian estimation methods are reviewed and proposed for the row and column parameters in two‐way Contingency tables without interaction. Rasch's multiplicative Poisson model for misreadings is discussed in an example. The case is treated where assumptions of exchangeability are reasonable a priori for the unknown parameters. Two different types of prior distributions are compared, It appears that gamma priors yield more tractable results than lognormal priors.