Peer Effects in Endogenous Networks

Timo C Hiller

Research output: Working paperWorking paper and Preprints

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Abstract

This paper presents a simple model of strategic network formation with local com-
plementarities in eort levels and positive local externalities. Equilibrium networks display - other than the complete and the empty network - a core-periphery structure, which is commonly observed in empirical studies. Ex-ante homogenous agents may obtain very dierent ex-post outcomes. These ndings are relevant for a wide range of social and economic phenomena, such as educational attainment, criminal activity, labor market participation and R&D expenditures of rms.
Original languageEnglish
Place of PublicationBristol
PublisherUniversity of Bristol
Number of pages26
Publication statusPublished - 1 Nov 2012

Publication series

NameBristol Economics Working Papers
No.12/633

Keywords

  • Network formation
  • peer effects
  • strategic complements
  • positive externalities

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