Econometric Models of Network Formation

TL;DR

This paper reviews recent econometric models of network formation, covering dyadic and non-dyadic models, and discusses their statistical tools, developments, and future research directions.

Contribution

It provides a comprehensive overview of econometric network formation models, highlighting recent advances and linking statistical and game-theoretic approaches.

Findings

Survey of dyadic and non-dyadic models

Discussion of statistical tools for network analysis

Identification of future research areas

Abstract

This article provides a selective review on the recent literature on econometric models of network formation. The survey starts with a brief exposition on basic concepts and tools for the statistical description of networks. I then offer a review of dyadic models, focussing on statistical models on pairs of nodes and describe several developments of interest to the econometrics literature. The article also presents a discussion of non-dyadic models where link formation might be influenced by the presence or absence of additional links, which themselves are subject to similar influences. This is related to the statistical literature on conditionally specified models and the econometrics of game theoretical models. I close with a (non-exhaustive) discussion of potential areas for further development.