Data Management

Peer Effects And Multiple Equilibria In The Risky Behavior Of Friends

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Executive Summary

The authors study social interactions in the risky behavior of best-friend pairs in the National Longitudinal Study of Adolescent Health (Add Health). Focusing on friends who had not yet initiated a particular behavior (sex, smoking, marijuana use, truancy) by the first wave of the survey, they estimate bivariate discrete choice models for their subsequent decisions that include peer effects and unobserved heterogeneity. Social interactions can lead to multiple equilibria in friends' choices: they consider simple equilibrium selection models as well as partial likelihood models that remain agnostic about the choice of equilibrium.

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