Behavioral Attenuation in Networks

Fulin Guo, Syngjoo Choi, Sanjeev Goyal and Frédéric Moisan

Janeway Institute Working Papers from Faculty of Economics, University of Cambridge

Abstract: Social networks shape individual behavior, and public policy increasingly leverages networks to enhance effectiveness. It is therefore important to understand how individuals behave in network interactions. This paper uses lab experiments to examine behavior in games on networks involving strategic substitutes and strategic complements. Theory suggests that an individual’s choice is proportional to their (Bonacich) centrality. Our experiments, however, find that while choices increase with centrality, the relationship is weaker than predicted. The total action levels individuals choose and the total payoff they achieve are higher than the Nash outcomes in some cases while lower in others. We find that these results can be coherently explained by individuals’ behavioral attenuation: they have incomplete adjustments to the strategic differences across network positions, exhibiting a bias toward generally high-payoff choices in complex networks—even when these choices are not optimal for their specific network positions.

Keywords: Centrality; Behavioural Biases; Networks (search for similar items in EconPapers)
JEL-codes: C92 D83 D85 Z13 (search for similar items in EconPapers)
Date: 2024-12-31
New Economics Papers: this item is included in nep-exp, nep-gth, nep-net and nep-ure
Note: sg472
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Working Paper: Behavioral Attenuation in Networks (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camjip:2433

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