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Myopic or Farsighted? An Experiment on Network Formation

  • Marco Mantovani

    (Università degli Studi di Milano and Université Libre de Bruxelles)

  • Georg Kirchsteiger

    (ECARES, Université Libre de Bruxelles, ECORE, CEPR, and CESifo)

  • Ana Mauleon

    (FNRS and CEREC, Facultés universitaires Saint-Louis and FNRS and CORE, Université catholique de Louvain)

  • Vincent Vannetelbosch

    (FNRS and CORE, Université catholique de Louvain)

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 Fondazione Eni Enrico Mattei in its series Working Papers with number 2011.45.

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Date of creation: Jun 2011
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Handle: RePEc:fem:femwpa:2011.45
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  3. Herings P. Jean-Jacques & Mauleon Ana & Vannetelbosch Vincent, 2006. "Farsightedly Stable Networks," Research Memorandum 041, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
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  17. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  18. 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).
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