Peer Effect Estimation in the Presence of Simultaneous Feedback and Unobserved Confounders
This paper addresses the dual challenges of simultaneity bias and unobserved confounding in estimating peer causal effects in complex systems such as social networks. Methodologically, it proposes the first unified framework jointly tackling both issues: (i) an I-G matrix transformation to decouple mutual dependencies; (ii) network-derived instrumental variables constructed via a two-stage residual inclusion (2SRI) approach; and (iii) an adversarial debiasing mechanism to correct for double bias under nonlinear, high-dimensional settings. Theoretically, the estimator is proven consistent under standard regularity conditions. Empirically, it significantly outperforms existing methods on semi-synthetic and real-world datasets, yielding more accurate recovery of true peer effects. The core contribution lies in the first formal unification of feedback and confounding modeling, establishing a deep learning–instrumental variable hybrid paradigm for network causal inference that offers both theoretical guarantees and strong empirical performance.