Toward a general theory of peer effects
Toward a general theory of peer effects
There is substantial empirical evidence showing that peer effects matter in many activities. The workhorse model in empirical work on peer effects is the linear-in means (LIM) model, whereby it is assumed that agents are linearly affected by the mean action of their peers. We develop a new general model of peer effects that relaxes the linear assumption of the best-reply functions and the mean peer behavior and that encompasses the spillover, conformist model, and LIM model as special cases. Then, using data on adolescent activities in the U.S., we structurally estimate this model. We find that for many activities, individuals do not behave according to the LIM model. We run some counterfactual policies and show that imposing the mean action as an individual social norm is misleading and leads to incorrect policy implications.
Spillovers, conformism, policies, structural estimation
543-565
Boucher, Vincent
95fd1e3f-761c-472b-8fe6-f3bd583eb8ae
Rendall, Michelle
18abebc1-c4c1-4edb-a118-b91c6891ae4a
Ushchev, Philip
03a4e50e-8429-45f1-86ec-fed2a3072e08
Zenou, Yves
38bf0c72-462b-4c08-8fd1-ce365b0296dc
March 2024
Boucher, Vincent
95fd1e3f-761c-472b-8fe6-f3bd583eb8ae
Rendall, Michelle
18abebc1-c4c1-4edb-a118-b91c6891ae4a
Ushchev, Philip
03a4e50e-8429-45f1-86ec-fed2a3072e08
Zenou, Yves
38bf0c72-462b-4c08-8fd1-ce365b0296dc
Boucher, Vincent, Rendall, Michelle, Ushchev, Philip and Zenou, Yves
(2024)
Toward a general theory of peer effects.
Econometrica, 92 (2), .
(doi:10.3982/ECTA21048).
Abstract
There is substantial empirical evidence showing that peer effects matter in many activities. The workhorse model in empirical work on peer effects is the linear-in means (LIM) model, whereby it is assumed that agents are linearly affected by the mean action of their peers. We develop a new general model of peer effects that relaxes the linear assumption of the best-reply functions and the mean peer behavior and that encompasses the spillover, conformist model, and LIM model as special cases. Then, using data on adolescent activities in the U.S., we structurally estimate this model. We find that for many activities, individuals do not behave according to the LIM model. We run some counterfactual policies and show that imposing the mean action as an individual social norm is misleading and leads to incorrect policy implications.
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Accepted/In Press date: 13 January 2024
Published date: March 2024
Keywords:
Spillovers, conformism, policies, structural estimation
Identifiers
Local EPrints ID: 488173
URI: http://eprints.soton.ac.uk/id/eprint/488173
ISSN: 0012-9682
PURE UUID: b3e82736-0200-4b1a-b560-5171e9ea3a52
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Date deposited: 17 Mar 2024 07:18
Last modified: 01 Nov 2024 02:44
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Contributors
Author:
Vincent Boucher
Author:
Michelle Rendall
Author:
Philip Ushchev
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