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A network experiment in continuous time: The influence of link costs. (English) Zbl 1192.91038

Summary: In recent work on non-cooperative network formation star-shaped networks play an important role. In a particular theoretical model of V. Bala and S. Goyal [Econometrica 68, No. 5, 1181–1229 (2000; Zbl 1022.91047)] center-sponsored stars are the only strict Nash networks. In testing this theoretical model, A. Falk and M. Kosfeld [“It’s all about connections: evidence on network formation”, IEW Working paper No. 148, University of Zürich (2003)] do not find experimental evidence that players select the center-sponsored star. Based on a slight modification of Bala and Goyal’s model, we design a network formation experiment in which, depending on link costs, periphery-sponsored stars and the empty network are the only strict Nash networks. We observe that almost all groups not only reach a strict Nash network once but also switch the center player in periphery-sponsored stars several times. The main innovation in our experiment is to use a continuous time framework which we believe to be a more realistic setting to study behavior in network formation situations and which makes coordination on stars much easier than simultaneous strategy adaptation in discrete time.

MSC:

91A43 Games involving graphs
91A10 Noncooperative games
91D30 Social networks; opinion dynamics
91A90 Experimental studies

Citations:

Zbl 1022.91047
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References:

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