centre for microdata methods and practice

ESRC centre

cemmap is an ESRC research centre


Keep in touch

Subscribe to cemmap news

Identifying preferences in networks with bounded degree

Authors: Áureo de Paula , Seth Richards-Shubik and Elie Tamer
Date: 10 August 2017
Type: cemmap Working Paper, CWP35/17
DOI: 10.1920/wp.cem.2017.3517


This paper provides a framework for identifying preferences in a large network where links are pairwise stable. Network formation models present difficulties for identifi cation, especially when links can be interdependent: e.g., when indirect connections matter. We show how one can use the observed proportions of various local network structures to learn about the underlying preference parameters. The key assumption for our approach restricts individuals to have bounded degree in equilibrium, implying a finite number of payoff-relevant local structures. Our main result provides necessary conditions for parameters to belong to the identifi ed set. We then develop a quadratic programming algorithm that can be used to construct this set. With further restrictions on preferences, we show that our conditions are also sufficient for pairwise stability and therefore characterize the identifi ed set precisely. Overall, the use of both the economic model along with pairwise stability allows us to obtain effective dimension reduction.

Download full version
Previous version:
Áureo de Paula, Seth Richards-Shubik and Elie Tamer December 2016, Identifying preferences in networks with bounded degree, cemmap Working Paper, CWP54/16, The IFS

Search cemmap

Search by title, topic or name.

Contact cemmap

Centre for Microdata Methods and Practice

How to find us

Tel: +44 (0)20 7291 4800

E-mail us