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A Structural Model for the Coevolution of Networks and Behavior

Author

Listed:
  • Chih-Sheng Hsieh

    (National Taiwan University)

  • Michael D. Konig

    (CEPR, ETH Zurich, KOF Swiss Economic Institute, Tinbergen Institute, and VU Amsterdam)

  • Xiaodong Liu

    (University of Colorado Boulder)

Abstract

This paper introduces a structural model for the coevolution of networks and behavior. We characterize the equilibrium of the underlying game and adopt the Bayesian Double Metropolis-Hastings algorithm to estimate the model. We further extend the model to incorporate unobserved heterogeneity and show that ignoring this heterogeneity can lead to biased estimates in simulation experiments. We apply the model to study RD investment and collaboration decisions in the chemical and pharmaceutical industry and find a positive knowledge spillover effect. Our model also provides a tractable framework for a long-run key player analysis.

Suggested Citation

  • Chih-Sheng Hsieh & Michael D. Konig & Xiaodong Liu, 2022. "A Structural Model for the Coevolution of Networks and Behavior," The Review of Economics and Statistics, MIT Press, vol. 104(2), pages 355-367, May.
    • Handle: RePEc:tpr:restat:v:104:y:2022:i:2:p:355-367
    DOI: 10.1162/rest_a_00958
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    2. Markus Kinateder & Luca Paolo Merlino, 2021. "The Evolution of Networks and Local Public Good Provision: A Potential Approach," Games, MDPI, vol. 12(3), pages 1-12, July.
    3. König, Michael D. & Rogers, Tim, 2023. "Endogenous technology cycles in dynamic R&D networks," European Economic Review, Elsevier, vol. 158(C).
    4. Chih‐Sheng Hsieh & Lung‐Fei Lee & Vincent Boucher, 2020. "Specification and estimation of network formation and network interaction models with the exponential probability distribution," Quantitative Economics, Econometric Society, vol. 11(4), pages 1349-1390, November.
    5. Cui Zhang & Dandan Zhang, 2023. "Spatial Interactions and the Spread of COVID-19: A Network Perspective," Computational Economics, Springer;Society for Computational Economics, vol. 62(1), pages 383-405, June.

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    More about this item

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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