A Network Formation Model Based on Subgraphs

75 Pages Posted: 9 Oct 2015 Last revised: 10 Nov 2023

See all articles by Arun G. Chandrasekhar

Arun G. Chandrasekhar

Stanford University - Department of Economics

Matthew O. Jackson

Stanford University - Department of Economics; Santa Fe Institute

Date Written: November 1, 2016

Abstract

We develop a new class of random graph models for the statistical estimation of network formation---subgraph generated models (SUGMs). Various subgraphs---e.g., links, triangles, cliques, stars---are generated and their union results in a network. We show that SUGMs are identified and establish the consistency and asymptotic distribution of parameter estimates in empirically relevant cases. We show that a simple four-parameter SUGM matches basic patterns in empirical networks more closely than four standard models (with many more dimensions): (i) stochastic block models; (ii) models with node-level unobserved heterogeneity; (iii) latent space models; (iv) exponential random graphs. We illustrate the framework's value via several applications using networks from rural India. We study whether network structure helps enforce risk-sharing and whether cross-caste interactions are more likely to be private. We also develop a new central limit theorem for correlated random variables, which is required to prove our results and is of independent interest.

Keywords: Subgraphs, Random Networks, Random Graphs, Exponential Random Graph Models, Exponential Family, Social Networks, Network Formation, Consistency, Sparse Networks

JEL Classification: D85, C51, C01, Z13

Suggested Citation

Chandrasekhar, Arun G. and Jackson, Matthew O., A Network Formation Model Based on Subgraphs (November 1, 2016). Available at SSRN: https://ssrn.com/abstract=2660381 or http://dx.doi.org/10.2139/ssrn.2660381

Arun G. Chandrasekhar

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
United States

Matthew O. Jackson (Contact Author)

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
United States
1-650-723-3544 (Phone)

HOME PAGE: http://www.stanford.edu/~jacksonm

Santa Fe Institute

1399 Hyde Park Road
Santa Fe, NM 87501
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
1,181
Abstract Views
5,710
Rank
33,038
PlumX Metrics