Theoretical and empirical investigations on social interactions

This dissertation analyzes models of or indirectly related to social interactions. The first essay studies inference in a continuous-time game where an agent's decision to quit an activity depends on the participation of other players. In equilibrium, similar actions can be explained not only by direct influences, but also by correlated factors. Our model can be seen as a simultaneous duration model with multiple decision makers and interdependent durations. We study the problem of determining existence and uniqueness of equilibrium stopping strategies in this setting. This paper provides results and conditions for the detection of these endogenous effects. First, we show that the presence of such effects is a necessary and sufficient condition for simultaneous exits. This allows us to set up a nonparametric test for the presence of such influences which is robust to multiple equilibria. Second, we provide conditions under which parameters in the game are identified. On the second chapter we apply the model to data on desertion in the Union Army during the American Civil War and find evidence of endogenous influences.; The third essay investigates the determinants of informal economic activity. We define informal firms as those which evade taxes. We present two models. Our first model presents a description of sector choice by individual entrepreneurs. We point out implications about the relationship between employment as well as investment levels and entrepreneurial ability across formal and informal groups. Our second model shows that informality may be transmitted across different industries linked by a production chain when value added taxes prevail. Firms informal suppliers have an increased incentive to become informal as tax rebates cannot be applied. Increased or reduced tolerance for informality in one stage impacts informality in another. We verify empirically our models using data from a Brazilian survey on informal firms.