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Myopic or Farsighted? An Experiment on Network Formation

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Author Info

  • Marco Mantovani

    (Università degli Studi di Milano and Université Libre de Bruxelles)

  • Georg Kirchsteiger

    (ECARES, Université Libre de Bruxelles, ECORE, CEPR, and CESifo)

  • Ana Mauleon

    (FNRS and CEREC, Facultés universitaires Saint-Louis and FNRS and CORE, Université catholique de Louvain)

  • Vincent Vannetelbosch

    (FNRS and CORE, Université catholique de Louvain)

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 Fondazione Eni Enrico Mattei in its series Working Papers with number 2011.45.

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Date of creation: Jun 2011
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Handle: RePEc:fem:femwpa:2011.45

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Keywords: Network Formation; Experiment; Myopic and Farsighted Stability;

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References

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  1. 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.
  2. Anthony Ziegelmeyer & Katinka Pantz, 2005. "Collaborative Networks in Experimental Triopolies," Papers on Strategic Interaction 2005-38, Max Planck Institute of Economics, Strategic Interaction Group.
  3. Goeree, Jacob K. & Riedl, Arno & Ule, Aljaz, 2005. "In Search of Stars: Network Formation among Heterogeneous Agents," IZA Discussion Papers 1754, Institute for the Study of Labor (IZA).
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  5. HERINGS, Jean-Jacques & MAULEON, Ana & VANNETELBOSCH, Vincent, 2006. "Farsightedly stable networks," CORE Discussion Papers 2006092, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Watts, Alison, 2001. "A Dynamic Model of Network Formation," Games and Economic Behavior, Elsevier, vol. 34(2), pages 331-341, February.
  7. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  8. Frank Page & Myrna Wooders, 2007. "Strategic Basins of Attraction, the Path Dominance Core, and Network Formation Games," Caepr Working Papers 2007-020, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington.
  9. Ana Mauleon & Vincent Vannetelbosch, 2004. "Farsightedness and Cautiousness in Coalition Formation Games with Positive Spillovers," Theory and Decision, Springer, vol. 56(3), pages 291-324, 05.
  10. 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).
  11. Jackson, Matthew O., 1998. "The Evolution of Social and Economic Networks," Working Papers 1044, California Institute of Technology, Division of the Humanities and Social Sciences.
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  16. Frank H. Page Jr. & Myrna H. Wooders & Samir Kamat, 2002. "Networks and Farsighted Stability," Computing in Economics and Finance 2002 370, Society for Computational Economics.
  17. Gilles Grandjean & Ana Mauleon & Vincent Vannetelbosch, 2011. "Connections Among Farsighted Agents," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 13(6), pages 935-955, December.
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  22. Watts, Alison, 2002. "Non-myopic formation of circle networks," Economics Letters, Elsevier, vol. 74(2), pages 277-282, January.
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Citations

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Cited by:
  1. Egbert, Henrik & Sedlarski, Teodor, 2011. "Exploring Impact: Negative Effects of Social Networks," MPRA Paper 56688, 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. B. Hoyer, 2013. "Network Disruption and the Common Enemy Effect," Working Papers 12-06, Utrecht School of Economics.
  4. Boncinelli, Leonardo & Pin, Paolo, 2014. "Efficiency and Stability in a Process of Teams Formation," MPRA Paper 56356, University Library of Munich, Germany.

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