A network experiment in continuous time: The influence of link costs
In recent work on non-cooperative network formation star-shaped networks play an important role. In a particular theoretical model of Bala and Goyal (2000) center-sponsored stars are the only strict Nash networks. In testing this theoretical model, Falk and Kosfeld (2003) do not find experimental evidence that players select the center-sponsored star. Based on a slight modification of Bala and Goyal’s model, we design a network formation experiment in which, depending on link costs, periphery-sponsored stars and the empty network are the only strict Nash networks. We observe that almost all groups not only reach a strict Nash network once but also switch the center player in periphery-sponsored stars several times. The main innovation in our experiment is to use a continuous time framework which we believe to be a more realistic setting to study behavior in network formation situations and which makes coordination on stars much easier than simultaneous strategy adaptation in discrete time. Copyright Economic Science Association 2006
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- Falk, Armin & Kosfeld, Michael, 2003.
"It's all about Connections: Evidence on Network Formation,"
IZA Discussion Papers
777, Institute for the Study of Labor (IZA).
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- Siegfried Berninghaus & Karl-Martin Ehrhart & Claudia Keser, 1999. "Continuous-Time Strategy Selection in Linear Population Games," Experimental Economics, Springer, vol. 2(1), pages 41-57, August.
- repec:bpj:rneart:v:3:y:2004:i:1:p:19-41 is not listed on IDEAS
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