Behavorial Effects in Individual Decisions of Network Formation
AbstractNetwork formation constitutes an important part of many social and economic processes, but relatively little is known about how individuals make their linking decisions. This article provides an experimental investigation of behavioral effects in individual decisions of network formation. Our findings demonstrate that individuals systematically simplify more complex components of network payoff in their linking decisions. Specifically, they focus on only part of the normative payoff, namely on their own direct payoff and tend to ignore indirect payoff and payoff for others in the network. Additionally, individuals use descriptive behavioral traits of link choice alternatives to guide their choices. They are sensitive to whether an alternative involves link deletion or creation and whether it concerns an isolated or a central node. Furthermore, we find that complexity of one type can moderate individuals’ dealing with a complex feature of another type. These behavioral effects have important implications for researchers and managers working in areas that involve network formation.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization in its series Research Memoranda with number 019.
Date of creation: 2008
Date of revision:
Contact details of provider:
Web page: http://www.maastrichtuniversity.nl/web/UMPublications.htm
Economics (Jel: A);
Other versions of this item:
- Harmsen-van Hout, Marjolein J.W. & Dellaert, Benedict G.C. & Herings, P. Jean-Jacques, 2008. "Behavorial Effects in Individual Decisions of Network Formation," Research Memorandum 019, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
- NEP-ALL-2008-07-05 (All new papers)
- NEP-CBE-2008-07-05 (Cognitive & Behavioural Economics)
- NEP-EVO-2008-07-05 (Evolutionary Economics)
- NEP-NET-2008-07-05 (Network Economics)
- NEP-SOC-2008-07-05 (Social Norms & Social Capital)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Esther Hauk & Rosemarie Nagel, 2000. "Choice of partners in multiple two-person prisoner's dilemma games: An experimental study," Economics Working Papers 487, Department of Economics and Business, Universitat Pompeu Fabra.
- Hannon, Bruce, 1994. "Sense of place: geographic discounting by people, animals and plants," Ecological Economics, Elsevier, vol. 10(2), pages 157-174, July.
- Simon, Herbert A, 1979.
"Rational Decision Making in Business Organizations,"
American Economic Review,
American Economic Association, vol. 69(4), pages 493-513, September.
- Simon, Herbert A., 1978. "Rational Decision-Making in Business Organizations," Nobel Prize in Economics documents 1978-1, Nobel Prize Committee.
- Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 351-401, June.
- Matthew O. Jackson & Asher Wolinsky, 1994.
"A Strategic Model of Social and Economic Networks,"
1098, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- John Duffy & Dean Corbae, 2006.
"Experiments with Network Formation,"
292, University of Pittsburgh, Department of Economics, revised Aug 2007.
- Gary Charness & Guillaume R. Frechette & John H. Kagel, 2004.
"How Robust is Laboratory Gift Exchange?,"
Springer, vol. 7(2), pages 189-205, 06.
- Charness, Gary & Frechette, Guillaume R & Kagel, John H, 2002. "How Robust is Laboratory Gift Exchange?," University of California at Santa Barbara, Economics Working Paper Series qt8qq4k3ph, Department of Economics, UC Santa Barbara.
- Daniel Kahneman, 2003. "Maps of Bounded Rationality: Psychology for Behavioral Economics," American Economic Review, American Economic Association, vol. 93(5), pages 1449-1475, December.
- Georg Kirchsteiger & Muriel Niederle & Jan Potters, 2005.
"Endogenizing Market Institutions: An Experimental Approach,"
ULB Institutional Repository
2013/149583, ULB -- Universite Libre de Bruxelles.
- Kirchsteiger, Georg & Niederle, Muriel & Potters, Jan, 2005. "Endogenizing market institutions: An experimental approach," European Economic Review, Elsevier, vol. 49(7), pages 1827-1853, October.
- Kirchsteiger, G. & Niederle, M. & Potters, J.J.M., 2005. "Endogenizing market institutions: An experimental approach," Open Access publications from Tilburg University urn:nbn:nl:ui:12-171357, Tilburg University.
- Swait, Joffre & Adamowicz, Wiktor, 2001. " The Influence of Task Complexity on Consumer Choice: A Latent Class Model of Decision Strategy Switching," Journal of Consumer Research, University of Chicago Press, vol. 28(1), pages 135-48, June.
- Charles Perrings & Bruce Hannon, 2001. "An Introduction to Spatial Discounting," Journal of Regional Science, Wiley Blackwell, vol. 41(1), pages 23-38.
- McFadden, Daniel L., 2000.
Nobel Prize in Economics documents
2000-6, Nobel Prize Committee.
- Eric J. Johnson & John W. Payne, 1985. "Effort and Accuracy in Choice," Management Science, INFORMS, vol. 31(4), pages 395-414, April.
- Elsner, Wolfram & Schwardt, Henning, 2012. "Trust and Arena Size. Expectations, Trust, and Institutions Co-Evolving, and Their Critical Population and Group Sizes," MPRA Paper 40393, University Library of Munich, Germany.
- Elsner, Wolfram & Heinrich, Torsten, 2009. "A simple theory of 'meso'. On the co-evolution of institutions and platform size--With an application to varieties of capitalism and 'medium-sized' countries," The Journal of Socio-Economics, Elsevier, vol. 38(5), pages 843-858, October.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Charles Bollen).
If references are entirely missing, you can add them using this form.