Effects of Idiosyncratic Investments in Collaborative Networks: An Experimental Analysis

Wilfred Amaldoss () and Amnon Rapoport
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Wilfred Amaldoss: Duke University

Chapter Chapter 4 in Experimental Business Research, 2005, pp 81-112 from Springer

Abstract: Abstract There has been an increase in the incidence of firms who collaborate to develop and market new products. Partners in these collaborations often make investments that are idiosyncratic to the collaboration and have limited value outside the scope of the alliance. Amaldoss and Rapoport (2003) reports that the joint investment of a network does not decrease if the number of partners increases. Specifically, if the investments are only partially idiosyncratic, the joint investment increases as a network grows in size. If they are fully idiosyncratic, then the joint investments are predicted to be independent of the number of partners. In this paper, we test these predictions in a laboratory setting. The experimental results support the qualitative predictions of the model, and adaptive learning accounts for the investment patterns of our subjects over time. We also extend the model to consider competitions among more than two networks.

Keywords: Network Size; Individual Investment; Total Investment; Collaborative Network; Network Partner (search for similar items in EconPapers)
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-0-387-24244-6_4

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DOI: 10.1007/0-387-24244-9_4

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