  This paper considers a network formation model when links are potentially
misclassified. We focus on a game-theoretical model of strategic network
formation with incomplete information, in which the linking decisions depend on
agents' exogenous attributes and endogenous network characteristics. In the
presence of link misclassification, we derive moment conditions that
characterize the identified set for the preference parameters associated with
homophily and network externalities. Based on the moment equality conditions,
we provide an inference method that is asymptotically valid when a single
network of many agents is observed. Finally, we apply our
misclassification-robust method to study the preference parameters of a lending
network in rural villages in southern India.
