Empirical Challenges with Peers-of-Peers Instruments in the Linear-In-Means Model
均值线性模型中朋友的朋友工具变量的实证挑战
In the linear-in-means model, endogeneity arises naturally due to the reflection problem. A common solution is to use Instrumental Variables (IVs) based on higher-order network links, such as using friends-of-friends' characteristics. In this paper, we show that such instruments are unlikely to work well in many applied settings due to a specific sparse/dense-network mechanism: in extremely sparse networks, friends-of-friends instruments may become degenerate, while in…