Econometrica: Mar, 2024, Volume 92, Issue 2
Toward a General Theory of Peer Effects
https://doi.org/10.3982/ECTA21048
p. 543-565
Vincent Boucher, Michelle Rendall, Philip Ushchev, Yves Zenou
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 United States, 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.
Supplemental Material
Supplement to "Toward a General Theory of Peer Effects"
Vincent Boucher, Michelle Rendall, Philip Ushchev, and Yves Zenou
The replication package for this paper is available at https://doi.org/10.5281/zenodo.10386299. The authors were granted an exemption to publish their data because either access to the data is restricted or the authors do not have the right to republish them. However, the authors included in the package a simulated or synthetic dataset that allows running their codes. The Journal checked the synthetic/simulated data and the codes for their ability to generate all tables and figures in the paper and approved online appendices. However, the synthetic/simulated data are not designed to reproduce the same results.
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