Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/279052 
Year of Publication: 
2023
Series/Report no.: 
IZA Discussion Papers No. 16354
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
There is substantial empirical evidence showing that peer effects matter in many activities. The workhorse model in empirical work on peer effects is the linear-in-means (LIM) model, whereby it is assumed that agents are linearly affected by the mean action of their peers. We develop a new general model of peer effects that relaxes the linear assumption of the best-reply functions and the mean peer behavior and that encompasses the spillover, conformist model, and LIM model as special cases. Then, using data on adolescent activities in the U.S., we structurally estimate this model. We find that for many activities, individuals do not behave according to the LIM model. We run some counterfactual policies and show that imposing the mean action as an individual social norm is misleading and leads to incorrect policy implications.
Subjects: 
peer effects
spillovers
conformism
policies
JEL: 
C31
D04
D85
Z13
Document Type: 
Working Paper

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