Superstars Need Social Benefits: An Experiment on Network Formation

Arthur Schram, Boris van Leeuwen () and Theo Offerman ()
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Theo Offerman: University of Amsterdam

No 1306, Working Papers from Departament Empresa, Universitat Autònoma de Barcelona

Abstract: We investigate contributions to the provision of public goods on a network when efficient provision requires the formation of a star network. We provide a theoretical analysis and study behavior is a controlled laboratory experiment. In a 2x2 design, we examine the effects of group size and the presence of (social) benefits for incoming links. We find that social benefits are highly important. They facilitate convergence to equilibrium networks and enhance the stability and efficiency of the outcome. Moreover, in large groups social benefits encourage the formation of superstars: star networks in which the core contributes more than expected in the stage-game equilibrium. We show that this result is predicted by a repeated game equilibrium.

Keywords: Network formation; networked public goods; peer production; social benefits; open source software. (search for similar items in EconPapers)
JEL-codes: C91 D85 H41 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2013-07, Revised 2013-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published in Working Papers at the Department of Business, Octuber, pages 1-49

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Working Paper: Superstars need Social Benefits: An Experiment on Network Formation (2013)
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