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Limited farsightedness in network formation


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


Pairwise stability (Jackson and Wolinsky, 1996) is the standard stability concept in network formation. It is a myopic notion in the sense that it only considers the immediate benefits of the players. A different perspective investigates perfect farsightedness, proposing related stability concepts. We design a simple network formation experiment to test these extreme theories, but find evidence against both of them: both myopically and farsightedly stable networks fail to emerge when they are not immune to limitedly farsighted deviations. The selection among multiple pairwise stable networks (and the performance of farsighted stability) crucially depends on the level of farsightedness needed to sustain them, and not on efficiency or cooperative considerations.

Suggested Citation

  • Kirchsteiger, Georg & Mantovani, Marco & Mauleon, Ana & Vannetelbosch, Vincent, 2016. "Limited farsightedness in network formation," Journal of Economic Behavior & Organization, Elsevier, vol. 128(C), pages 97-120.
  • Handle: RePEc:eee:jeborg:v:128:y:2016:i:c:p:97-120
    DOI: 10.1016/j.jebo.2016.05.016

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    Cited by:

    1. Pietro Battiston, 2016. "Constrained Network Formation," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 2(3), pages 347-362, November.
    2. repec:eee:jeborg:v:145:y:2018:i:c:p:567-591 is not listed on IDEAS
    3. Offerman, Theo & Schram, Arthur & Van Leeuwen, Boris, 2014. "Competition for status creates superstars: An experiment on public good provision and network formation," IAST Working Papers 14-16, Institute for Advanced Study in Toulouse (IAST).
    4. Michael Caldara & Michael McBride, 2014. "An Experimental Study of Network Formation with Limited Observation," Working Papers 141501, University of California-Irvine, Department of Economics.
    5. Herings, P.J.J. & Mauleon, A. & Vannetelbosch, V., 2014. "Stability of networks under level-k farsightedness," Research Memorandum 030, Maastricht University, Graduate School of Business and Economics (GSBE).
    6. Margherita Comola & Marcel Fafchamps, 2015. "An Experimental Study of Decentralized Link Formation with Competition," NBER Working Papers 21758, National Bureau of Economic Research, Inc.

    More about this item


    Network formation; Experiment; Myopic and farsighted stability;

    JEL classification:

    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior


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