A network experiment in continuous time: the influence of link costs

Siegfried Berninghaus, Karl-Martin Ehrhart and Marion Ott

No 05-02, Papers from Sonderforschungsbreich 504

Abstract: In recent work on non-cooperative network formation star-shaped networks play an important role. In a particular theoretical model of Bala and Goyal (2000) center-sponsored stars are the only strict Nash networks. In testing this theoretical model Falk and Kosfeld (2003) do not find any experimental evidence that players select the center-sponsored star. Based on a slight modification of Bala and Goyal's model we design a network formation experiment with varying link costs in which almost all groups not only reach a strict Nash network once but also switch strict Nash networks several times. The main innovation in our experiment is to use a continuous time framework which makes coordination on "stars" much easier than simultaneous strategy adaptation in discrete time.

Keywords: Network formation; Nash networks; real-time network experiments (search for similar items in EconPapers)
JEL-codes: C72 C78 C92 (search for similar items in EconPapers)
Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: A network experiment in continuous time: The influence of link costs (2006)
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