A network experiment in continuous time: The influence of link costs
AbstractIn recent work on non-cooperative network formation star-shaped networks play an important role. In a particular theoretical model of Bala and Goyal (2000) center-sponsored stars are the only strict Nash networks. In testing this theoretical model, Falk and Kosfeld (2003) do not find experimental evidence that players select the center-sponsored star. Based on a slight modification of Bala and Goyalâ€™s model, we design a network formation experiment in which, depending on link costs, periphery-sponsored stars and the empty network are the only strict Nash networks. We observe that almost all groups not only reach a strict Nash network once but also switch the center player in periphery-sponsored stars several times. The main innovation in our experiment is to use a continuous time framework which we believe to be a more realistic setting to study behavior in network formation situations and which makes coordination on stars much easier than simultaneous strategy adaptation in discrete time. Copyright Economic Science Association 2006
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Bibliographic InfoArticle provided by Springer in its journal Experimental Economics.
Volume (Year): 9 (2006)
Issue (Month): 3 (September)
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Web page: http://www.springerlink.com/link.asp?id=102888
Network formation; Nash networks; Real-time experiments;
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