Identification of a Rank-dependent Peer Effect Model
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arXiv
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| Main Authors: | , |
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| Format: | Preprint |
| Published: |
2024
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| _version_ | 1866910851368222720 |
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| author | Herstad, Eyo I. Shin, Myungkou |
| author_facet | Herstad, Eyo I. Shin, Myungkou |
| contents | We develop a model that captures peer effect heterogeneity by modeling the endogenous spillover to be linear in ordered peer outcomes. Unlike the canonical linear-in-means model, our approach accounts for the distribution of peer outcomes as well as the size of peer groups. Under a minimal condition, our model admits a unique equilibrium and is therefore tractable and identified. Simulations show our estimator has good finite sample performance. Finally, we apply our model to educational data from Norway, finding that higher-performing friends disproportionately drive GPA spillovers. Our framework provides new insights into the structure of peer effects beyond aggregate measures. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2410_14317 |
| institution | arXiv |
| publishDate | 2024 |
| record_format | arxiv |
| spellingShingle | Identification of a Rank-dependent Peer Effect Model Herstad, Eyo I. Shin, Myungkou Econometrics We develop a model that captures peer effect heterogeneity by modeling the endogenous spillover to be linear in ordered peer outcomes. Unlike the canonical linear-in-means model, our approach accounts for the distribution of peer outcomes as well as the size of peer groups. Under a minimal condition, our model admits a unique equilibrium and is therefore tractable and identified. Simulations show our estimator has good finite sample performance. Finally, we apply our model to educational data from Norway, finding that higher-performing friends disproportionately drive GPA spillovers. Our framework provides new insights into the structure of peer effects beyond aggregate measures. |
| title | Identification of a Rank-dependent Peer Effect Model |
| topic | Econometrics |
| url | https://arxiv.org/abs/2410.14317 |