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An experimental study of partnership formation in social networks

Author

Listed:
  • Francis Bloch

    (Université Paris 1 and Paris School of Economics)

  • Bhaskar Dutta

    (University of Warwick and Ashoka University)

  • Stéphane Robin

    (Université de Lyon
    Beijing Normal University)

Abstract

This paper reports on laboratory experiments on the formation of partnerships in social networks. Agents randomly request favors and turn to their neighbors to form a partnership where they commit to provide the favor when requested. The formation of a partnership is modeled as a sequential game, which admits a unique subgame perfect equilibrium resulting in the formation of the maximum number of partnerships. Experimental results show that a large fraction of the subjects (75%) play according to their subgame perfect equilibrium strategy and reveals that the efficient maximum matching is formed over 78% of the times. When subjects deviate from their best responses, they accept to form partnerships too early. The incentive to accept when it is optimal to reject is positively correlated with subjects’ risk aversion, and players employ simple heuristics – like the presence of a captive partner – to decide whether they should accept or reject the formation of a partnership.

Suggested Citation

  • Francis Bloch & Bhaskar Dutta & Stéphane Robin, 2018. "An experimental study of partnership formation in social networks," Working Papers 05, Ashoka University, Department of Economics.
    • Handle: RePEc:ash:wpaper:05
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    File URL: https://dp.ashoka.edu.in/ash/wpaper/paper05_0.pdf
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    References listed on IDEAS

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    1. Bramoulle, Yann & Galeotti, Andrea & Rogers, Brian (ed.), 2016. "The Oxford Handbook of the Economics of Networks," OUP Catalogue, Oxford University Press, number 9780199948277, Decembrie.
    2. Charness, Gary & Corominas-Bosch, Margarida & Frechette, Guillaume R., 2007. "Bargaining and network structure: An experiment," Journal of Economic Theory, Elsevier, vol. 136(1), pages 28-65, September.
    3. Matthew O. Jackson & Tomas Rodriguez-Barraquer & Xu Tan, 2012. "Social Capital and Social Quilts: Network Patterns of Favor Exchange," American Economic Review, American Economic Association, vol. 102(5), pages 1857-1897, August.
    4. Yann Bramoullé & Andrea Galeotti & Brian Rogers, 2016. "The Oxford Handbook of the Economics of Networks," Post-Print hal-01447842, HAL.
    5. Corominas-Bosch, Margarida, 2004. "Bargaining in a network of buyers and sellers," Journal of Economic Theory, Elsevier, vol. 115(1), pages 35-77, March.
    6. Yann Bramoullé & Andrea Galeotti & Brian Rogers, 2016. "The Oxford Handbook of the Economics of Networks," Post-Print hal-03572533, HAL.
    7. Catherine Eckel & Philip Grossman & Cathleen Johnson & Angela Oliveira & Christian Rojas & Rick Wilson, 2012. "School environment and risk preferences: Experimental evidence," Journal of Risk and Uncertainty, Springer, vol. 45(3), pages 265-292, December.
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    Cited by:

    1. Bloch, Francis & Dutta, Bhaskar & Manea, Mihai, 2019. "Efficient partnership formation in networks," Theoretical Economics, Econometric Society, vol. 14(3), July.
    2. Francis Bloch & Bhaskar Dutta & Mihai Manea, 2019. "Efficient Partnership Formation In Networks," Working Papers 1014, Ashoka University, Department of Economics.

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    Keywords

    laboratory experiments;

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