2025/05/13 by Mathieu Lambotte · 2 citations
Economics, Econometrics and Finance · Engineering · Social Sciences · #ICT Impact and Policies #Microfinance and Financial Inclusion #School Choice and Performance
paper · doi:10.1002/jae.3128
openalex publication_date 2025/05/13 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/04
ABSTRACT This paper introduces a generalized model of peer effects for binary outcomes, based on a network game that accounts for strategic complementarity (influence of the number of peers that select the same action) and conformity to social norms (penalizing deviations from the average peers' action). We derive conditions for a unique Bayesian Nash equilibrium under rational expectations about peers' behavior. Unobserved individual heterogeneity affecting network formation and peer effects is addressed nonparametrically using a control function nested pseudo likelihood estimator, whose asymptotic properties are established. The model is applied to microfinance participation in India.