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An Experimental Study of Network Formation with Limited Observation

Author

Listed:
  • Michael Caldara

    () (Economic Science Institute, Chapman University)

  • Michael McBride

    () (Department of Economics, University of California-Irvine)

Abstract

Many social and economic networks emerge among actors that only partially observe the network when forming network ties. We ask: what types of network architectures form when actors have limited observation, and does limited observation lead to less efficient structures? We report numerous results from a laboratory experiment that varies both network observation and the cost of forming links. Overall, we find that limited network observation does not inevitably lead to highly inefficient networks but instead might actually inhibit inefficient positional jockeying among actors.

Suggested Citation

  • Michael Caldara & Michael McBride, 2014. "An Experimental Study of Network Formation with Limited Observation," Working Papers 141501, University of California-Irvine, Department of Economics.
  • Handle: RePEc:irv:wpaper:141501
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    File URL: https://www.economics.uci.edu/files/docs/workingpapers/2014-15/14-15-01.pdf
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    References listed on IDEAS

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    Cited by:

    1. Gaudeul, Alexia & Giannetti, Caterina, 2015. "Privacy, trust and social network formation," Center for European, Governance and Economic Development Research Discussion Papers 269, University of Goettingen, Department of Economics.
    2. 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).
    3. repec:eee:jeborg:v:141:y:2017:i:c:p:233-253 is not listed on IDEAS

    More about this item

    Keywords

    Networks; Limited observation; Coordination;

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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