Network Econometrics: Theory and Applications

Paper Session

Saturday, Jan. 7, 2017 8:00 AM – 10:00 AM

Hyatt Regency Chicago, Water Tower
Hosted By: Econometric Society
  • Chair: Bryan Graham, University of California-Berkeley

Homophily and Transitivity in Dynamic Network Formation

Bryan Graham
,
University of California-Berkeley

Abstract

In social and economic networks linked agents often share additional links in common. There are two competing explanations for this phenomenon. First, agents may have a structural taste for transitive links -- the returns to linking may be higher if two agents share links in common. Second, agents may assortatively match on unobserved attributes, a process called homophily. I study parameter identifiability in a simple model of dynamic network formation with both effects. Agents form, maintain, and sever links over time in order to maximize utility. The return to linking may be higher if agents share friends in common. A pair-specific utility component allows for arbitrary homophily on time-invariant agent attributes. I derive conditions under which it is possible to detect the presence of a taste for transitivity in the presence of assortative matching on unobservables. I leave the joint distribution of the initial network and the pair-specific utility component, a very high dimensional object, unrestricted. The analysis is of the `fixed effects' type. The identification result is constructive, suggesting an analog estimator, whose single large network properties I characterize.

Strategic Network Formation With Many Agents

Konrad Menzel
,
New York University

Abstract

We consider a random utility model of strategic network formation, where we derive a tractable approximation to the distribution of network links using many-player asymptotics. Our framework assumes that agents have heterogeneous tastes over links, and allows for anonymous and non-anonymous interaction effects among links. The observed network is assumed to be pairwise or cyclically stable, and we impose no restrictions regarding selection among multiple stable outcomes. Our main results concern convergence of the link frequency distribution from finite pairwise stable networks to the many-player limiting distribution. The set of possible limiting distributions is shown to have a fairly simple form and is characterized through aggregate equilibrium conditions, which may permit multiple solutions. We analyze identification of link preferences and propose a method for estimation of preference parameters.

Matching Games With Prices and Externalities

Jeremy Fox
,
Rice University
Hector Perez-Saiz
,
Bank of Canada
Xun Tang
,
Rice University

Abstract

We study identification and estimation of matching games with transferable utility and externalities and apply the techniques to mergers.

Collaborative Production in Science: An Empirical Analysis of Coauthorships in Economics

Seth Richards-Shubik
,
Lehigh University
Katherine A. Anderson
,
Carnegie Mellon University

Abstract

This paper studies productivity and preferences in scientific
research. We apply a recently developed method for estimating network formation models to the network of coauthorships in economics. Our model focuses on skill complementarities among researchers with different specialties (e.g., econometrics or macroeconomics) and on costs such as coordinating among multiple coauthors and communicating across multiple locations. Once estimated, the model can be used to simulate aggregate research productivity under policy counterfactuals such as changing the distribution of skills in the workforce (e.g., by subsidizing certain fields in PhD programs) or decreasing the cost of inter-university collaboration (e.g., by funding travel or telecommunication equipment).

Indirect Methods of Estimating Network Structure

Arun Gauthamm Chandrasekhar
,
Stanford University

Abstract

This paper provides a method for Indirect Methods of Estimating Network Structure.
JEL Classifications
  • C0 - General