-
Abstract
We study a general class of models with social interactions that might display multiple equilibria. We
propose an estimation procedure for these models and evaluate its efficiency and computational
feasibility relative to different approaches taken to the curse of dimensionality implied
by the multiplicity. Using data on smoking among teenagers, we implement the proposed
estimation procedure to understand how group interactions affect health-related choices.
Wefind that interaction effects are strong both at the school level and at the smaller
friends-network level. Multiplicity of equilibria is pervasive at the estimated parameter
values, and equilibrium selection accounts for about 15 percent of the observed smoking
behavior. Counterfactuals show that student interactions, surprisingly, reduce smoking
by approximately 70 percent with respect to the equilibrium smoking that would occur
without interactions.
-
CitationBibTeX
Bisin, Alberto, Andrea Moro, and Giorgio Topa. "[Dormant] The Empirical Content of Models with Multiple Equilibria in Economies with Social Interactions,"
NBER Working Paper w17196,
July
2011
@article{bisin-moro-topa-empirical-multiple-equilibria-2011,
title = "[Dormant] The Empirical Content of Models with Multiple Equilibria in Economies with Social Interactions",
author = "Bisin, Alberto and Andrea Moro and Giorgio Topa",
year = "2011",
month = " July ",
journal = "NBER Working Paper",
volume = "w17196",
url = "http://www.nber.org/papers/w17196"
}