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Behavioral Effects in Individual Decisions of Network Formation: Complexity Reduces Payoff Orientation and Social Preferences

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  • Harmsen - van Hout, Marjolein J.W.

    ()
    (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))

  • Dellaert, Benedict G.C.

    ()
    (Department of Business Economics / Marketing Section, Erasmus School of Economics, Erasmus University Rotterdam)

  • Herings, P. Jean-Jacques

    ()
    (Department of Economics, School of Business and Economics, Maastricht University)

Abstract

Network formation constitutes an important part of many social and economic processes, but relatively little is known about how individuals make their linking decisions in networks. This article provides an experimental investigation of behavioral effects in individual decisions of network formation. Our findings demonstrate that the inherent complexity of the network setting makes individuals’ choices systematically less payoff-guided and also strongly reduces their social orientation. Furthermore, we show that specific network complexity features aggravate the former effect. These behavioral effects have important implications for researchers and managers working in areas that involve network formation.

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Bibliographic Info

Paper provided by E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN) in its series FCN Working Papers with number 5/2010.

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Length: 36 pages
Date of creation: May 2010
Date of revision:
Handle: RePEc:ris:fcnwpa:2010_005

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Web page: http://www.eonerc.rwth-aachen.de/fcn
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Related research

Keywords: network formation; individual decision making; behavioral effects; network complexity; payoff orientation; social preferences; choice experiments; mixed logit;

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Cited by:
  1. Sorda, Giovanni & Sunak, Yasin & Madlener, Reinhard, 2011. "A Spatial MAS Simulation to Evaluate the Promotion of Electricity from Agricultural Biogas Plants in Germany," FCN Working Papers 1/2011, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), revised Oct 2012.
  2. Gampert, Markus & Madlener, Reinhard, 2010. "Pan-European Management of Electricity Portfolios: Risks and Opportunities of Contract Bundling," FCN Working Papers 9/2010, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  3. Ernst, Christian-Simon & Hackbarth, André & Madlener, Reinhard & Lunz, Benedikt & Sauer, Dirk Uwe & Eckstein, Lutz, 2010. "Battery Sizing for Serial Plug-in Hybrid Vehicles: A Model-Based Economic Analysis for Germany," FCN Working Papers 14/2010, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), revised Jun 2011.
  4. Kraas, Birk & Schroedter-Homscheidt, Marion & Pulvermüller, Benedikt & Madlener, Reinhard, 2011. "Economic Assessment of a Concentrating Solar Power Forecasting System for Participation in the Spanish Electricity Market," FCN Working Papers 12/2011, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  5. Bellmann, Enno & Lang, Joachim & Madlener, Reinhard, 2010. "Cost Evaluation of Credit Risk Securitization in the Electricity Industry: Credit Default Acceptance vs. Margining Costs," FCN Working Papers 13/2010, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), revised May 2011.
  6. Michelsen, Carl Christian & Madlener, Reinhard, 2011. "Homeowners' Preferences for Adopting Residential Heating Systems: A Discrete Choice Analysis for Germany," FCN Working Papers 9/2011, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  7. Achtnicht, Martin, 2010. "Do environmental benefits matter? A choice experiment among house owners in Germany," ZEW Discussion Papers 10-094, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  8. Lohwasser, Richard & Madlener, Reinhard, 2013. "Relating R&D and investment policies to CCS market diffusion through two-factor learning," Energy Policy, Elsevier, vol. 52(C), pages 439-452.
  9. Melchior, Tobias & Madlener, Reinhard, 2012. "Economic evaluation of IGCC plants with hot gas cleaning," Applied Energy, Elsevier, vol. 97(C), pages 170-184.
  10. Harmsen - van Hout, Marjolein J.W. & Herings, P. Jean-Jacques & Dellaert, Benedict G.C., 2010. "Communication Network Formation with Link Specificity and Value Transferability," FCN Working Papers 15/2010, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), revised Mar 2011.
  11. Bernstein, Ronald & Madlener, Reinhard, 2011. "Responsiveness of Residential Electricity Demand in OECD Countries: A Panel Cointegation and Causality Analysis," FCN Working Papers 8/2011, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  12. Rohlfs, Wilko & Madlener, Reinhard, 2010. "Cost Effectiveness of Carbon Capture-Ready Coal Power Plants with Delayed Retrofit," FCN Working Papers 8/2010, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), revised Dec 2010.

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