Network Structure in a Link-formation Game: An Experimental Study

Alexander Elbittar (), Rodrigo Harrison and Roberto Muñoz

No DTE 405, Working Papers from CIDE, División de Economía

Abstract: Network formation is frequently modeled using link-formation games and typically present a multiplicity of Nash equilibria. Cooperative refinements---such as strong or coalitional proof Nash equilibria' have been the standard tool used for equilibrium selection in these games. Non-cooperative refinements derived from the theory of global games have shown also that, for a class of payoff functions, multiplicity of equilibria disappears when the game is perturbed by introducing small amounts of incomplete information. We conducted a laboratory study evaluating the predictive power of each of these refinements in an illustrative link-formation game. Compared with cooperative game solutions, the global game approach did significantly better at predicting the strategies played by individuals in the experiment.

Keywords: Network Structure; Link-formation Game; Experimental Study (search for similar items in EconPapers)
JEL-codes: C72 C91 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2007-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: NETWORK STRUCTURE IN A LINK FORMATION GAME: AN EXPERIMENTAL STUDY (2014)
Working Paper: Network Structure in a Link-formation Game: An Experimental Study (2008)
Working Paper: Network Structure in a Link-formation Game: An Experimental Study (2007)
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