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Myopic or Farsighted? An Experiment on Network Formation

Author

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

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.

Suggested Citation

  • Mantovani, Marco & Kirchsteiger, Georg & Mauleon, Ana & Vannetelbosch, Vincent, 2011. "Myopic or Farsighted? An Experiment on Network Formation," Climate Change and Sustainable Development 108256, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemcl:108256
    DOI: 10.22004/ag.econ.108256
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    Cited by:

    1. B. Hoyer, 2012. "Network Disruption and the Common Enemy Effect," Working Papers 12-06, Utrecht School of Economics.
    2. Falk Armin & Kosfeld Michael, 2012. "It's all about Connections: Evidence on Network Formation," Review of Network Economics, De Gruyter, vol. 11(3), pages 1-36, September.
    3. Britta Hoyer & Kris De Jaegher, 2023. "Network disruption and the common-enemy effect," International Journal of Game Theory, Springer;Game Theory Society, vol. 52(1), pages 117-155, March.
    4. 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.
    5. Liza Charroin, 2016. "The effect of sequentiality and heterogeneity in network formation games," Working Papers halshs-01368067, HAL.
    6. Leonardo Boncinelli & Alessio Muscillo & Paolo Pin, 2022. "Efficiency and Stability in a Process of Teams Formation," Dynamic Games and Applications, Springer, vol. 12(4), pages 1101-1129, December.
    7. Pietro Battiston, 2014. "Citations are Forever: Modeling Constrained Network Formation," LEM Papers Series 2014/19, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    8. Henrik Egbert & Teodor Sedlarski, 2011. "Exploring Impact: Negative Effects of Social Networks," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 1(2), pages 1-80.
    9. A. Stefano Caria & Marcel Fafchamps, 2015. "Can Farmers Create Efficient Information Networks? Experimental Evidence from Rural India," CSAE Working Paper Series 2015-07, Centre for the Study of African Economies, University of Oxford.
    10. Carrillo, Juan & Gaduh, Arya, 2012. "The Strategic Formation of Networks: Experimental Evidence," CEPR Discussion Papers 8757, C.E.P.R. Discussion Papers.

    More about this item

    Keywords

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    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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