UNDERSTANDING REGRESSION VERSUS VARIANCE TESTS FOR SOCIAL INTERACTIONS

"This article considers the relationship between the use of regressions and the use of variance contrast methods to uncover social interactions. We illustrate how these methods employ different identifying assumptions and are therefore complementary approaches. We also provide formal identification results that extend existing ones for the two methods. "("JEL "C12, C21, C23, Z13) Copyright (c) 2008 Western Economic Association International.