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Myopic or farsighted? An experiment on network formation

  • KIRCHSTEIGER, Georg

    ()

    (ECARES, Université Libre de Bruxelles, B-1050 Bruxelles, Belgium; CESifo and CEPR)

  • MANTOVANI, Marco

    (Università degli Studi di Milano)

  • MAULEON, Ana

    ()

    (FNRS and CEREC, Facultés Universitaires Saint-Louis, B-1000 Bruxelles, Belgium)

  • VANNETELBOSCH, Vincent

    ()

    (FNRS & Université catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium)

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.

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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2011007.

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Date of creation: 01 Feb 2011
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Handle: RePEc:cor:louvco:2011007
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  1. Vincent Vannetelbosch & Gilles Grandjean & Ana Mauleon, 2009. "Connections Among Farsighted Agents," Working Papers 2009.30, Fondazione Eni Enrico Mattei.
  2. Goeree,Jacob K. & Riedl,Arno & Ule,Aljaz, 2005. "In Search of Stars: Network Formation among Heterogeneous Agents," Research Memorandum 032, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
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  6. Jean-Jacques, HERINGS & Ana, MAULEON & Vincent, VANNETELBOSCH, 2006. "Farsightedly stable networks," Discussion Papers (ECON - Département des Sciences Economiques) 2006046, Université catholique de Louvain, Département des Sciences Economiques.
  7. Anthony Ziegelmeyer & Katinka Pantz, 2005. "Collaborative Networks in Experimental Triopolies," Papers on Strategic Interaction 2005-38, Max Planck Institute of Economics, Strategic Interaction Group.
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  9. Engelmann Dirk & Strobel Martin, 2002. "Inequality Aversion, Efficiency, and Maximin Preferences in Simple Distribution Experiments," Research Memorandum 015, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
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  15. MAULEON, Ana & VANNETELBOSCH, Vincent, . "Farsightedness and cautiousness in coalition formation games with positive spillovers," CORE Discussion Papers RP 1729, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  16. Page Jr., Frank H. & Wooders, Myrna, 2009. "Strategic basins of attraction, the path dominance core, and network formation games," Games and Economic Behavior, Elsevier, vol. 66(1), pages 462-487, May.
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  19. Kosfeld Michael, 2004. "Economic Networks in the Laboratory: A Survey," Review of Network Economics, De Gruyter, vol. 3(1), pages 1-23, March.
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  22. Bhaskar Dutta & Sayantan Ghosal & Debraj Ray, 2004. "Farsighted Network Formation," Working papers 122, Centre for Development Economics, Delhi School of Economics.
  23. Venkatesh Bala & Sanjeev Goyal, 2000. "A Noncooperative Model of Network Formation," Econometrica, Econometric Society, vol. 68(5), pages 1181-1230, September.
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