Quantile Effects in Discrete Choice with Social Interactions

23 Pages Posted: 13 Dec 2018 Last revised: 8 Jun 2021

See all articles by Zhongjian Lin

Zhongjian Lin

Emory University - Department of Economics

Date Written: June 7, 2021

Abstract

This paper provides a method to study quantile effects in discrete choice with social interactions. The method is based on a simultaneous discrete Bayesian game from quantile preference and maximization in decision making and demonstrates heterogenous peer effects on different quantiles of discrete outcomes. The heterogeneous peer effects parameters are estimated by a nested pseudo score (NPS) approach, which is developed to tackle the computational burden pertaining to the discrete game. Consistency and asymptotic normality are established for the proposed NPS estimator. We illustrate the finite sample performance of the model and the estimator by Monte Carlo experiments and an application of the heterogeneous peer effects among students on exercise decisions, using the National Longitudinal Study of Adolescent Health dataset.

Keywords: Quantile Effects, Heterogeneous Peer Effects, Maximum Score, Discrete Bayesian Game, Nested Pseudo Score, Sequential Estimation, Exercise.

JEL Classification: C14, C31, C57, C63, I12

Suggested Citation

Lin, Zhongjian, Quantile Effects in Discrete Choice with Social Interactions (June 7, 2021). Available at SSRN: https://ssrn.com/abstract=3288339 or http://dx.doi.org/10.2139/ssrn.3288339

Zhongjian Lin (Contact Author)

Emory University - Department of Economics ( email )

1602 Fishburne Drive
Atlanta, GA 30322
United States

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