Jochmans, Koen (2022) Peer Effects and Endogenous Social Interactions. TSE Working Paper, n. 22-1348, Toulouse, France

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This paper proposes a solution to the problem of the self-selection of peers in the linear-in-means model. We do not require to specify a model for how the selection of peers comes about. Rather, we exploit two restrictions that are inherent in many such specifications to construct conditional moment conditions. The restrictions in question are that link decisions that involve a given individual are not all independent of one another, but that they are independent of the link decisions made between other pairs of individuals that are located sufficiently far away in the network. These
conditions imply that instrumental variables can be constructed from leave-own-out networks.

Item Type: Monograph (Working Paper)
Language: English
Date: July 2022
Place of Publication: Toulouse, France
Uncontrolled Keywords: instrumental variable, linear-in-means model, network, self-selection
JEL Classification: C31 - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 01 Sep 2022 11:03
Last Modified: 01 Sep 2022 11:03
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