Selection and Endogenous Treatment Models with Social Interactions: An Application to the Impact of Exercise on Self-Esteem

32 Pages Posted: 9 Mar 2021

See all articles by Zhongjian Lin

Zhongjian Lin

Emory University - Department of Economics

Francis Vella

Georgetown University; IZA Institute of Labor Economics

Abstract

We address the estimation of sample selection and endogenous treatment models with social interactions. To model the interaction between individuals in an internally consistent matter we employ a game theoretic approach based on the use of a discrete Bayesian game. We overcome the substantial computational burden this introduces through a sequential version of the nested fixed point algorithm. We describe how our methodology can be applied to a large class of commonly employed models. We employ our approach to examine the impact of an individual's frequency of exercise on her level of self esteem in a setting where an individual's exercise frequency is treated as endogenous and is potentially influenced by her belief of her friends' exercise frequency.

JEL Classification: C31, C34, C57, Z2

Suggested Citation

Lin, Zhongjian and Vella, Francis, Selection and Endogenous Treatment Models with Social Interactions: An Application to the Impact of Exercise on Self-Esteem. IZA Discussion Paper No. 14167, Available at SSRN: https://ssrn.com/abstract=3798920 or http://dx.doi.org/10.2139/ssrn.3798920

Zhongjian Lin (Contact Author)

Emory University - Department of Economics ( email )

1602 Fishburne Drive
Atlanta, GA 30322
United States

Francis Vella

Georgetown University ( email )

Washington, DC 20057
United States
202-687-5573 (Phone)

HOME PAGE: http://explore.georgetown.edu/people/fgv/

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

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