I develop a dynamic heterogeneous agents model of strategic network formation, where a matching technology and preferences for same-type individuals drive the dynamics of friendship. The model converges to a unique stationary distribution that is structurally estimated using Markov Chain Monte Carlo methods and stochastic approximation techniques. I use… (More)
This paper develops a framework for analyzing individuals' choices in the presence of endogenous social networks and implements it with data on teen smoking decisions and friendship networks. By allowing actions and friendships to be jointly chosen, the framework extends the literature on social interactions, which either models choices, taking the social… (More)
This article reviews the rapidly growing literature on structural models of complementary choices. It discusses recent modeling developments and identifies promising areas for future research.