Endogenous network production functions with selectivity

William C. Horrace, Xiaodong Liu, Eleonora Patacchini

Research output: Contribution to journalArticlepeer-review

17 Scopus citations


We consider a production function that transforms inputs into outputs through peer effect networks. The distinguishing features of this model are that the network is formal and observable through worker scheduling, and selection into the network is done by a manager. We discuss identification and suggest several estimation techniques. We tackle endogeneity arising from selection into groups and exposure to common group factors by employing a polychotomous Heckman-type selection correction. We illustrate our method using data from the Syracuse University Men's Basketball team, where at any time the coach selects a lineup and players interact strategically to win games.

Original languageEnglish (US)
Pages (from-to)222-232
Number of pages11
JournalJournal of Econometrics
Issue number2
StatePublished - Feb 1 2016


  • Endogenous network formation
  • Peer effects
  • Selectivity
  • Spatial autoregressive model
  • Stochastic frontier model

ASJC Scopus subject areas

  • Economics and Econometrics


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