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Identification and Inference of Network Formation Games with Misclassified Links

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  • Candelaria, Luis E.

    (University of Warwick)

  • Ura, Takuya

    (University of California, Davis)

Abstract

This paper considers a network formation model when links are potentially measured with error. We focus on a game-theoretical model of strategic network formation with incomplete information, in which the linking decisions depend on agents’ exogenous attributes and endogenous network characteristics. In the presence of link misclassification, we derive moment conditions that characterize the identified set for the preference parameters associated with homophily and network externalities. Based on the moment equality conditions, we provide an inference method that is asymptotically valid when a single network of many agents is observed. Finally, we apply our proposed method to study trust networks in rural villages in southern India.

Suggested Citation

  • Candelaria, Luis E. & Ura, Takuya, 2020. "Identification and Inference of Network Formation Games with Misclassified Links," The Warwick Economics Research Paper Series (TWERPS) 1258, University of Warwick, Department of Economics.
    • Handle: RePEc:wrk:warwec:1258
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    File URL: https://warwick.ac.uk/fac/soc/economics/research/workingpapers/2020/twerp_1258_-_candelaria.pdf
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    References listed on IDEAS

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    Cited by:

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    More about this item

    Keywords

    Misclassification ; Network formation models ; Strategic interactions ; Incomplete information JEL codes: C13 ; C31;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: 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

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