An Empirical Model for Strategic Network Formation

32 Pages Posted: 4 Jun 2010 Last revised: 5 Jun 2010

See all articles by Nicholas A. Christakis

Nicholas A. Christakis

Yale University, Law School, Students

James H. Fowler

UC San Diego Division of Social Sciences; UC San Diego School of Medicine

Guido W. Imbens

Stanford Graduate School of Business

Karthik Kalyanaraman

Harvard University

Date Written: May 2010

Abstract

We develop and analyze a tractable empirical model for strategic network formation that can be estimated with data from a single network at a single point in time. We model the network formation as a sequential process where in each period a single randomly selected pair of agents has the opportunity to form a link. Conditional on such an opportunity, a link will be formed if both agents view the link as beneficial to them. They base their decision on their own characateristics, the characteristics of the potential partner, and on features of the current state of the network, such as whether the two potential partners already have friends in common. A key assumption is that agents do not take into account possible future changes to the network. This assumption avoids complications with the presence of multiple equilibria, and also greatly simplifies the computational burden of anlyzing these models. We use Bayesian markov-chain-monte-carlo methods to obtain draws from the posterior distribution of interest. We apply our methods to a social network of 669 high school students, with, on average, 4.6 friends. We then use the model to evaluate the effect of an alternative assignment to classes on the topology of the network.

Suggested Citation

Christakis, Nicholas A. and Fowler, James H. and Imbens, Guido W. and Kalyanaraman, Karthik, An Empirical Model for Strategic Network Formation (May 2010). NBER Working Paper No. w16039. Available at SSRN: https://ssrn.com/abstract=1617041

Nicholas A. Christakis (Contact Author)

Yale University, Law School, Students ( email )

127 Wall Street
New Haven, CT 06511
United States

James H. Fowler

UC San Diego Division of Social Sciences ( email )

9500 Gilman Drive
Code 0521
La Jolla, CA 92093-0521
United States

HOME PAGE: http://jhfowler.ucsd.edu

UC San Diego School of Medicine ( email )

9500 Gilman Drive
MC 0507
La Jolla, CA 92093
United States

HOME PAGE: http://jhfowler.ucsd.edu

Guido W. Imbens

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Karthik Kalyanaraman

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

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