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Is less really more? Asymmetries in peer effects for binary outcomes

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  • Mathieu Lambotte

    (Univ Rennes, CNRS, CREM – UMR6211, F-35000 Rennes France)

Abstract

I introduce asymmetry in the analysis of peer effects, microfounded on a network game for a binary outcome. Indeed, overdoing and underdoing relatively to the social norm might lead to asymmetric social penalties. The extent and direction of this asymmetry depends on the behavior under scrutiny. I develop conditions under which this network game results in an unique Bayes-Nash equilibrium depending on rational expectations about peers’ behavior and propose an estimation strategy based on an nested fixed point maximum likelihood estimator. The model is brought to the data with an application to smoking and alcohol drinking behaviors of high-school students in the United States.

Suggested Citation

  • Mathieu Lambotte, 2024. "Is less really more? Asymmetries in peer effects for binary outcomes," Economics Working Paper Archive (University of Rennes & University of Caen) 2024-05, Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS.
    • Handle: RePEc:tut:cremwp:2024-05
    as

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    References listed on IDEAS

    as
    1. Lung-fei Lee & Ji Li & Xu Lin, 2014. "Binary Choice Models with Social Network under Heterogeneous Rational Expectations," The Review of Economics and Statistics, MIT Press, vol. 96(3), pages 402-417, July.
    2. Peter Kooreman & Adriaan R. Soetevent, 2007. "A discrete-choice model with social interactions: with an application to high school teen behavior," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(3), pages 599-624.
    3. Liu, Xiaodong & Zhou, Jiannan, 2017. "A social interaction model with ordered choices," Economics Letters, Elsevier, vol. 161(C), pages 86-89.
    4. Alberto Bisin & Andrea Moro & Giorgio Topa, 2011. "The empirical content of models with multiple equilibria in economies with social interactions," Staff Reports 504, Federal Reserve Bank of New York.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    peer effects; asymmetry; social norm; binary outcome; rational expectations;
    All these keywords.

    JEL classification:

    • 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
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • C57 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Econometrics of Games and Auctions
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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