Behavioral Effects in Individual Decisions of Network Formation: Complexity Reduces Payoff Orientation and Social Preferences

Marjolein Harmsen - van Hout (), Benedict Dellaert and P. Jean-Jacques Herings

No 5/2010, FCN Working Papers from E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)

Abstract: Network formation constitutes an important part of many social and economic processes, but relatively little is known about how individuals make their linking decisions in networks. This article provides an experimental investigation of behavioral effects in individual decisions of network formation. Our findings demonstrate that the inherent complexity of the network setting makes individuals’ choices systematically less payoff-guided and also strongly reduces their social orientation. Furthermore, we show that specific network complexity features aggravate the former effect. These behavioral effects have important implications for researchers and managers working in areas that involve network formation.

Keywords: network formation; individual decision making; behavioral effects; network complexity; payoff orientation; social preferences; choice experiments; mixed logit (search for similar items in EconPapers)
JEL-codes: A14 C91 D85 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2010-05
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-exp, nep-gth, nep-net and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Related works:
Working Paper: Behavorial effects in individual decisions of network formation (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:ris:fcnwpa:2010_005

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