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Superstars Need Social Benefits: An Experiment on Network Formation

Author

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  • Arthur Schram

    () (University of Amsterdam)

  • Boris Van Leeuwen

    () (Toulouse School of Economics)

  • Theo Offerman

    () (University of Amsterdam)

Abstract

We investigate contributions to the provision of public goods on a network when efficient provision requires the formation of a star network. We provide a theoretical analysis and study behavior is a controlled laboratory experiment. In a 2x2 design, we examine the effects of group size and the presence of (social) benefits for incoming links. We find that social benefits are highly important. They facilitate convergence to equilibrium networks and enhance the stability and efficiency of the outcome. Moreover, in large groups social benefits encourage the formation of superstars: star networks in which the core contributes more than expected in the stage-game equilibrium. We show that this result is predicted by a repeated game equilibrium.

Suggested Citation

  • Arthur Schram & Boris Van Leeuwen & Theo Offerman, 2013. "Superstars Need Social Benefits: An Experiment on Network Formation," Working Papers 1306, Departament Empresa, Universitat Autònoma de Barcelona, revised Jul 2013.
  • Handle: RePEc:bbe:wpaper:1306
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    References listed on IDEAS

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    Cited by:

    1. Sanjeev Goyal & Stephanie Rosenkranz & Utz Weitzel & Vincent Buskens, 2017. "Information Acquisition and Exchange in Social Networks," Economic Journal, Royal Economic Society, vol. 127(606), pages 2302-2331, November.
    2. Michael Caldara & Michael McBride, 2014. "An Experimental Study of Network Formation with Limited Observation," Working Papers 141501, University of California-Irvine, Department of Economics.
    3. Mantilla, César, 2015. "Communication networks in common-pool resource games: Field experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 118(C), pages 215-226.
    4. Sanjeev Goyal & Stephanie Rosenkranz & Utz Weitzel & Vincent Buskens, 2014. "Individual Search and Social Networks," Working Papers 2014.49, Fondazione Eni Enrico Mattei.
    5. 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).

    More about this item

    Keywords

    Network formation; networked public goods; peer production; social benefits; open source software.;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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