Searching for "Stars" - Recent Experimental Results on Network Formation -

Inspired by the theoretical results on network formation by Bala and Goyal (2000) and experimental evidence by Plott and Callander (2002) and Falk and Kosfeld (2003) we design network formation experiments in discrete and continuous time. Particularly in the continuous time experiment, we observe that many groups not only reach a strict Nash network but also switch to other strict Nash networks during the course of time. Strict Nash networks, therefore, prove to be a good indicator for predicting network formation. In explaining our results, we highlight the role of the complexity of network structures, of inequity aversion, and the players� activity levels as most important determinants for forming strict Nash networks.

[1]  Claudia Keser,et al.  Continuous-Time Strategy Selection in Linear Population Games , 1999 .

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

[3]  B A Huberman,et al.  Evolutionary games and computer simulations. , 1993, Proceedings of the National Academy of Sciences of the United States of America.

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

[5]  Sanjeev Goyal,et al.  Network Formation and Social Coordination , 2003, Games Econ. Behav..

[6]  Werner Güth,et al.  Privately contributing to public goods over time: An experimental study , 2002 .

[7]  H. Holzer,et al.  Informal Job Search and Black Youth Unemployment , 1986 .

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

[9]  Armin Falk,et al.  It's All About Connections: Evidence on Network Formation , 2003 .

[10]  Thomas Pitz,et al.  Experiments and Simulations on Day-to-Day Route Choice-Behaviour , 2003, SSRN Electronic Journal.

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

[12]  Urs Fischbacher,et al.  z-Tree - Zurich toolbox for readymade economic experiments: experimenter's manual , 1999 .

[13]  Bodo Vogt,et al.  Network formation and coordination games , 2003 .

[14]  R. Gilles,et al.  Spatial social networks , 2000 .

[15]  John McMillan,et al.  Interfirm Relationships and Informal Credit in Vietnam , 1998 .

[16]  Siegfried K. Berninghaus,et al.  Time horizon and equilibrium selection in tacit coordination games: Experimental results , 1998 .

[17]  Karl-Martin Ehrhart,et al.  The power of ESS: An experimental study , 2003 .

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