Multivariate choices and identification of social interactions

Abstract

Summary This paper considers the identification of social interaction effects in the context of multivariate choices. First, we generalize the theoretical social interaction model to allow individuals to make interdependent choices in different activities. Based on the theoretical model, we propose a simultaneous equation network model and discuss the identification of social interaction effects in the econometric model. We also provide an empirical example to show the empirical salience of this model. Using the Add Health data, we find that a student's academic performance is not only affected by academic performance of his peers but also affected by screen‐related activities of his peers.

Abnormal Returns or Mismeasured Risk? Network Effects and Risk Spillover in Stock Returns

“…where the effect of additional FF firm-specific factors is not included. The above CAPM model (2) can imply a specific form of network architecture, known in the spatial econometrics literature as a social interactions model (Lee et al 2010;Hsieh and Lee 2016;Cohen-Cole et al 2018;Dogan et al 2018) or a farmer-district model (Case 1992;Robinson 2003;Gupta and Robinson 2015), whereby the units (here, stocks) are classified into several groups or social networks. Stocks in the same social network are related to each other, but not to stocks in the other networks.…”

“…There are three important special cases of symmetry. First, there are social network models where individuals in the same network share information or interact with each other, but not with members in other networks; see, for example, Lee et al (2010) and Cohen-Cole et al (2018). This model is also closely related to the farmer-district model (Case 1992;Robinson 2003).…”

Superstar Economists: Coauthorship networks and research output

“…The quadratic cost speciication includes the convex separable cost speciication as a special case when ϕ = 0. A theoretical model with a similar cost speciication but allowing for only two activities is studied in Belhaj and Deroïan [2014] and an empirical analysis is provided in Liu [2014] andCohen-Cole et al [2018]. Further, a convex separable cost speciication can be found in the model studied in Adams [2006].…”

GMM identification and estimation of peer effects in a system of simultaneous equations

“…In a recent paper, Cohen-Cole et al (2018) develop a simultaneous equations network model and suggest an estimation procedure by extending the generalized spatial 2SLS and 3SLS estimators proposed by Kelejian and Prucha (2004). Following the insight of Bramoullé et al (2009), the identification strategy in Cohen-Cole et al (2018) exploits exclusion restrictions from intransitivity of network connections. Liu (2014) considers the identification of the simultaneous equations network model when the adjacency matrix that represents network topology has non-constant row sums.…”

“…In this case, Liu (2014) shows that the Bonacich centrality (Bonacich 1987) provides additional information to identify peer effects and can be used as an instrumental variable (IV) to improve estimation efficiency. As Cohen-Cole et al (2018) and Liu (2014) focus on IV-based linear estimators, the corresponding identification strategy only utilizes linear moment conditions.…”