Simulation Analysis for Network Formulation

In their model of network formation, Berninghaus et al. (Exp Econ 9:237–251, 2006; J Evol Econ 17:317–347, 2007) showed that a periphery-sponsored star network is a strict Nash equilibrium. To examine the validity of their result, they also performed a laboratory experiment with human subjects, and they found that a periphery-sponsored star network can be formed, but when broken down, a different star network forms. In this paper, after considering some factors explaining this phenomenon, we develop a simulation system involving these factors with artificial autonomous agents. Through simulations using this system, we try to explain the behavior of human subjects in the network formation experiment, i.e., the fact that a strict Nash equilibrium periphery-sponsored star network is broken down and a different periphery-sponsored star network is formed.

[1]  A. Rapoport,et al.  Coordination, “Magic,” and Reinforcement Learning in a Market Entry Game , 1998 .

[2]  R. Hegselmann,et al.  Simulating Social Phenomena , 1997 .

[3]  Sergio Currarini,et al.  Network Formation with Sequential Demands , 2000 .

[4]  A. Roth,et al.  Learning in Extensive-Form Games: Experimental Data and Simple Dynamic Models in the Intermediate Term* , 1995 .

[5]  Steven Callander,et al.  Principles of network development and evolution: an experimental study , 2002 .

[6]  Ichiro Nishizaki,et al.  A general framework of agent-based simulation for analyzing behavior of players in games , 2007 .

[7]  Bodo Vogt,et al.  Evolution of networks—an experimental analysis , 2007 .

[8]  R. Aumann,et al.  The Shapley value: Endogenous formation of links between players and of coalitions: an application of the Shapley value , 1988 .

[9]  W. Güth,et al.  Ultimatum bargaining behavior : a survey and comparison of experimental results , 1990 .

[10]  Gabrielle Demange,et al.  A Survey of Network Formation Models: Stability and Efficiency , 2005 .

[11]  Siegfried K. Berninghaus,et al.  A Network Experiment in Continuous Time , 2005 .

[12]  A. Roth,et al.  Two-sided matching , 1990 .

[13]  M. Jackson.  A Survey of Models of Network Formation: Stability and Efficiency , 2003 .

[14]  Kathleen M. Carley,et al.  Dynamic Social Network Modeling and Analysis: Workshop Summary and Papers , 2004 .

[15]  Jacob K. Goeree,et al.  In Search of Stars: Network Formation among Heterogeneous Agents , 2007, Games Econ. Behav..

[16]  Jaime Simão Sichman,et al.  Multi-Agent-Based Simulation II , 2003, Lecture Notes in Computer Science.

[17]  John H. Miller,et al.  Auctions with Artificial Adaptive Agents , 1995 .

[18]  Ichiro Nishizaki,et al.  LOTTERIES AS A MEANS OF FINANCING FOR PRESERVATION OF THE GLOBAL COMMONS AND AGENT-BASED SIMULATION ANALYSIS , 2005, Appl. Artif. Intell..

[19]  Amnon Rapoport,et al.  Coordination in market entry games with symmetric players , 1995 .

[20]  J. Holland,et al.  Artificial Adaptive Agents in Economic Theory , 1991 .

[21]  Siegfried K. Berninghaus,et al.  A network experiment in continuous time: The influence of link costs , 2006 .

[22]  Phillip Ein-Dor,et al.  Neural nets in a group decision process , 2003, Int. J. Game Theory.

[23]  Jaime Simão Sichman,et al.  Multi-Agent-Based Simulation, Third International Workshop, MABS 2002, Bologna, Italy, July 15-16, 2002, Revised Papers , 2003, MABS.

[24]  Philippa Pattison,et al.  Dynamic Social Network Modelling and Analysis , 2003 .

[25]  Isaac Meilijson,et al.  Evolution of reinforcement learning in foraging bees: a simple explanation for risk averse behavior , 2002, Neurocomputing.

[26]  Gary E. Bolton,et al.  ERC: A Theory of Equity, Reciprocity, and Competition , 2000 .

[27]  Gary E. Bolton.  A Comparative Model of Bargaining: Theory and Evidence , 1991 .

[28]  Cary Deck,et al.  Link bidding in laboratory networks , 2004 .

[29]  Patrick Doreian,et al.  Evolution Of Social Networks. Part II. Special Issue Of Journal Of Mathematical Sociology, 25 , 2001 .

[30]  Andrew Postlewaite,et al.  Barriers to trade and disadvantageous middlemen: Nonmonotonicity of the core , 1978 .

[31]  Miguel A. Costa-Gomes,et al.  Ultimatum Bargaining Behavior in Israel, Japan, Slovenia, and the United States: A Social Utility Analysis , 2001, Games Econ. Behav..

[32]  Robert Axelrod,et al.  The Evolution of Strategies in the Iterated Prisoner's Dilemma , 2001 .

[33]  William Sharkey,et al.  Network Models in Economics , 1991 .

[34]  Jaime Simão Sichman,et al.  Multi-Agent-Based Simulation , 2002, Lecture Notes in Computer Science.

[35]  Michele Piccione,et al.  The Economics of Hubs: The Case of Monopoly , 1995 .

[36]  Klaus Fischer,et al.  The Micro-Macro Link in DAI and Sociology , 2000, MABS.

[37]  Claudia Pahl-Wostl,et al.  Understanding Climate Policy Using Participatory Agent-Based Social Simulation , 2000, MABS.

[38]  Eyal Winter,et al.  Coordination and Learning Behavior in Large Groups with Asymmetric Players , 2002, Games Econ. Behav..

[39]  S. Parsons,et al.  Game Theory and Decision Theory in Agent-Based Systems , 2002, Multiagent Systems, Artificial Societies, and Simulated Organizations.

[40]  Sanjeev Goyal,et al.  A Noncooperative Model of Network Formation , 2000 .

[41]  R. Duncan Luce,et al.  Individual Choice Behavior , 1959 .

[42]  Robert Axelrod.  Advancing the art of simulation in the social sciences , 1997 .

[43]  Joshua M. Epstein,et al.  Growing Artificial Societies: Social Science from the Bottom Up , 1996 .

[44]  Mark S. Granovetter.  Getting a Job: A Study of Contacts and Careers , 1974 .

[45]  S. Boorman.  A Combinatorial Optimization Model for Transmission of Job Information through Contact Networks , 1975 .

[46]  J. Montgomery.  Social Networks and Labor-Market Outcomes: Toward an Economic Analysis , 1991 .

[47]  S. Goyal.  Connections: An Introduction to the Economics of Networks , 2009 .

[48]  R. Dorsey,et al.  The Use of Artificial Neural Networks for Estimation of Decision Surfaces in First Price Sealed Bid Auctions , 1994 .

[49]  J. Ochs.  Games with Unique, Mixed Strategy Equilibria: An Experimental Study , 1995 .

[50]  F. Stokman.  Evolution of social networks , 1997 .

[51]  Patrick Doreian,et al.  Introduction To Special Issue On Evolution Of Social Networks , 2001 .

[52]  Noah E. Friedkin,et al.  Horizons of Observability and Limits of Informal Control in Organizations , 1983 .

[53]  Eyal Winter,et al.  Subscription Mechanisms for Network Formation , 2002, J. Econ. Theory.

[54]  I. Nishizaki,et al.  Simulation Analysis Using Multi-Agent Systems for Social Norms , 2009 .

[55]  A. Roth,et al.  Predicting How People Play Games: Reinforcement Learning in Experimental Games with Unique, Mixed Strategy Equilibria , 1998 .

[56]  Michael Keren,et al.  The Internal Organization of the Firm and the Shape of Average Costs , 1983 .

[57]  Richard S. Sutton,et al.  Reinforcement Learning: An Introduction , 1998, IEEE Trans. Neural Networks.

[58]  R. McKelvey,et al.  Quantal Response Equilibria for Normal Form Games , 1995 .

[59]  Klaus M. Schmidt,et al.  A Theory of Fairness, Competition, and Cooperation , 1999 .

[60]  Richard S. Sutton,et al.  Introduction to Reinforcement Learning , 1998 .

[61]  M. Jackson,et al.  A Strategic Model of Social and Economic Networks , 1996 .

[62]  David B. Fogel,et al.  Evolving neural networks to play checkers without relying on expert knowledge , 1999, IEEE Trans. Neural Networks.