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Myopic or Farsighted? An Experiment on Network Formation

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  • Kirchsteiger, Georg
  • Mantovani, Marco
  • Mauleon, Ana
  • Vannetelbosch, Vincent

Abstract

Pairwise stability (Jackson and Wolinsky, 1996) is the standard stability concept in network formation. It assumes myopic behavior of the agents in the sense that they do not forecast how others might react to their actions. Assuming that agents are farsighted, related stability concepts have been proposed. We design a simple network formation experiment to test these theories. Our results provide support for farsighted stability and strongly reject the idea of myopic behavior.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8263.

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Date of creation: Feb 2011
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Handle: RePEc:cpr:ceprdp:8263

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Keywords: experiment; myopic and farsighted stability; Network formation;

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References

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  1. Page, Frank Jr. & Wooders, Myrna H. & Kamat, Samir, 2005. "Networks and farsighted stability," Journal of Economic Theory, Elsevier, vol. 120(2), pages 257-269, February.
  2. Frank Page & Myrna Wooders, 2007. "Strategic Basins of Attraction, the Path Dominance Core, and Network Formation Games," Caepr Working Papers, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington 2007-020, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington.
  3. GANDJEAN, Gilles & MAULEON, Ana & VANNETELBOSCH, Vincent, 2009. "Connections among farsighted agents," CORE Discussion Papers, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) 2009031, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Falk, Armin & Kosfeld, Michael, 2003. "It's all about Connections: Evidence on Network Formation," IZA Discussion Papers 777, Institute for the Study of Labor (IZA).
  5. Watts, Alison, 2001. "A Dynamic Model of Network Formation," Games and Economic Behavior, Elsevier, vol. 34(2), pages 331-341, February.
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  7. Herings, P. Jean-Jacques & Mauleon, Ana & Vannetelbosch, Vincent J., 2004. "Rationalizability for social environments," Games and Economic Behavior, Elsevier, vol. 49(1), pages 135-156, October.
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  12. MAULEON, Ana & VANNETELBOSCH, Vincent, . "Farsightedness and cautiousness in coalition formation games with positive spillovers," CORE Discussion Papers RP -1729, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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  18. Goeree,Jacob K. & Riedl,Arno & Ule,Aljaz, 2005. "In Search of Stars: Network Formation among Heterogeneous Agents," Research Memorandum 032, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
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Cited by:
  1. Boncinelli, Leonardo & Pin, Paolo, 2014. "Efficiency and Stability in a Process of Teams Formation," MPRA Paper 56356, University Library of Munich, Germany.
  2. Egbert, Henrik & Sedlarski, Teodor, 2011. "Exploring Impact: Negative Effects of Social Networks," MPRA Paper 56688, University Library of Munich, Germany.
  3. Charness, Gary & Feri, Francesco & Meléndez-Jiménez, Miguel A. & Sutter, Matthias, 2012. "Equilibrium Selection in Experimental Games on Networks," University of California at Santa Barbara, Economics Working Paper Series qt51v6w9hd, Department of Economics, UC Santa Barbara.
  4. B. Hoyer, 2013. "Network Disruption and the Common Enemy Effect," Working Papers, Utrecht School of Economics 12-06, Utrecht School of Economics.

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