My Friend Far, Far Away: A Random Field Approach to Exponential Random Graph Models
51 Pages Posted: 4 Nov 2012 Last revised: 24 Apr 2017
Date Written: April 2017
We explore the asymptotic properties of strategic models of network formation in very large populations. Specifically, we focus on (undirected) exponential random graph models (ERGMs). We want to recover a set of parameters from the individuals' utility functions using the observation of a single, but large, social network. We show that under some conditions, a simple logit estimator is coherent, consistent and asymptotically normally distributed under a weak version of homophily. The approach is compelling as the computing time is minimal and the estimator can be easily implemented using pre-programmed estimators available in most statistical packages. We provide an application of our method using the Add Health database.
Keywords: social network, pairwise stability, spatial econometrics
JEL Classification: C13, D85
Suggested Citation: Suggested Citation