Efficient Estimation and Inference with Binary Response Dyadic Regression
Dyadic data is known to exhibit a distinctive form of correlation known as dyadic clustering. To study binary network data, several latent variable models have been developed to account dependence, yet the latent structures proposed can be rather complex and valid inference depends on its correct specification.
On the other hand, the use of fixed effect procedures although robust to potential endogeneity issues, controls out relevant information in the model and impedes the identification of coefficients associated with agent-specific regressors. We propose to work with minimal assumptions on the data generating process, focusing on the first two data moments. This allows to construct a consistent and asymptotically normal estimator based on a quasi-likelihood procedure accounting for dyadic clustering. The proposed estimator has the advantage of not depending on strong assumptions on the specification of the latent components, while aiming to gain efficiency in the estimation process and inference.