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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. Calvó-Armengol, Antoni & Zenou, Yves, 2003. "Social Networks and Crime Decisions: The Role of Social Structure in Facilitating Delinquent Behavior," Working Paper Series 601, Research Institute of Industrial Economics.
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  3. Aljaž Ule & Jacob K. Goeree & Arno Riedl, 2007. "In Search of Stars: Network Formation among Heterogeneous Agents," Working Papers 2007.65, Fondazione Eni Enrico Mattei.
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  11. Engelmann,Dirk & Strobel,Martin, 2002. "Inequality Aversion, Efficiency, and Maximin Preferences in Simple Distribution Experiments," Research Memorandum 015, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
  12. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
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  16. 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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Citations

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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. 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.
  3. Egbert, Henrik & Sedlarski, Teodor, 2011. "Exploring Impact: Negative Effects of Social Networks," MPRA Paper 56688, University Library of Munich, Germany.
  4. B. Hoyer, 2013. "Network Disruption and the Common Enemy Effect," Working Papers 12-06, Utrecht School of Economics.

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