Simulation-based estimation of peer effects [An article from: Journal of Econometrics] | ![Simulation-based estimation of peer effects [An article from: Journal of Econometrics]](http://ecx.images-amazon.com/images/I/51HZTNAKAZL._SL160_.jpg)
 enlarge | Author: B.v. Krauth
Publisher: Elsevier
Category: Book
Buy New: $10.95
Format: Html
Media: Digital
Pages: 28
Publication Date: July 1, 2006
Availability: Available for download now
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Product Description
This digital document is a journal article from Journal of Econometrics, published by Elsevier in 2006. The article is delivered in HTML format and is available in your Amazon.com Media Library immediately after purchase. You can view it with any web browser.
Description:
The influence of peer behavior on an individual's choices has received renewed interest in recent years. However, accurate measures of this influence are difficult to obtain. Standard reduced-form methods lead to upwardly biased estimates due to simultaneity, common shocks, and nonrandom peer group selection. This paper describes a structural econometric model of peer effects in binary choice, as well as a simulated maximum likelihood estimator for its parameters. The model is nonparametrically identified under plausible restrictions, and can place informative bounds on parameter values under much weaker restrictions. Monte Carlo results indicate that this estimator performs better than a reduced form approach in a wide variety of settings. A brief application to youth smoking demonstrates the method and suggests that previous studies dramatically overstate peer influence.
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