Experimental Evidence on Group Size Effects in Network Formation Games

Syngjoo Choi, Sanjeev Goyal, Fulin Guo and Frédéric Moisan

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: This paper presents experimental evidence on games where individuals can unilaterally decide on their links with each other. Linking decisions give rise to directed graphs. We consider two classes of situations: one, benefits flow along the direction of the network paths (one-way flow), and two, when the benefits flow on network paths without regard to the direction of links (two-way flow). Our experiments reveal that in the one-way flow model subjects create sparse networks whose distance grows and efficiency falls as group size grows; by contrast, in the two-way flow model subjects create sparse and small world networks whose efficiency remains high in both small and large groups. We show that a bounded rational model that combines myopic best response with targeting a most connected individual provides a coherent account of our experimental data.

Keywords: Data; Group Size; Network Formation; Network Games; Networks (search for similar items in EconPapers)
Date: 2024-03-26
New Economics Papers: this item is included in nep-exp, nep-net and nep-soc
Note: sg472
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Related works:
Working Paper: Experimental Evidence on Group Size Effects in Network Formation Games (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:2417

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