📝 SummarXiv

Abstract

This paper develops a peer effect model for count responses under rational expectations. The model accounts for heterogeneity in peer effects through groups based on observed characteristics. Identification is based on the linear model condition requiring friends' friends who are not direct friends, which I show extends to a broad class of nonlinear models. Parameters are estimated using a nested pseudo-likelihood approach. An empirical application on students' extracurricular participation reveals that females are more responsive to peers than males. An easy-to-use R package, CDatanet, is available for implementing the model.