arXiv 19 Apr 2024 · Econometrics
arXiv:2404.12581 · PDF · DOI · OpenAlex · Extracted main text
In this paper, I characterize the network formation process as a static game of incomplete information, where the latent payoff of forming a link between two individuals depends on the structure of the network, as well as private information on agents' attributes. I allow agents' private unobserved attributes to be correlated with observed attributes through individual fixed effects. Using data from a single large network, I propose a two-step estimator for the model primitives. In the first step, I estimate agents' equilibrium beliefs of other people's choice probabilities. In the second step, I plug in the first-step estimator to the conditional choice probability expression and estimate the model parameters and the unobserved individual fixed effects together using Joint MLE. Assuming that the observed attributes are discrete, I showed that the first step estimator is uniformly consistent with rate $N^{-1/4}$, where $N$ is the total number of linking proposals. I also show that the second-step estimator converges asymptotically to a normal distribution at the same rate.
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The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.
| Reference | Intensity | Mentions | Sections | Main text | |
|---|---|---|---|---|---|
| 1 | Leung (2015) Two-step estimation of network-formation models with incomplete information | 1.000 | 16 | 3 | 100% |
| 2 | Graham (2017) An econometric model of network formation with degree heterogeneity | 0.737 | 4 | 2 | 75% |
| 3 | Ridder and Sheng (2022) Two-Step Estimation of a Strategic Network Formation Model with Clustering | 0.585 | 3 | 1 | 100% |
| 4 | Arellano and Hahn (2007) Understanding bias in nonlinear panel models: Some recent developments | 0.405 | 1 | 1 | 100% |
| 5 | Hahn and Newey (2004) Jackknife and analytical bias reduction for nonlinear panel models | 0.405 | 1 | 1 | 100% |
| 6 | Miyauchi (2016) Structural estimation of pairwise stable networks with nonnegative externality | 0.405 | 1 | 1 | 100% |
| 7 | Sheng (2020) A structural econometric analysis of network formation games through subnetworks | 0.405 | 1 | 1 | 100% |
Showing the top 7 of 7 scored citations.