Searching for "Stars" - Recent Experimental Results on Network Formation -

Siegfried K. Berninghaus (), Karl-Martin Ehrhart (), Marion Ott and Bodo Vogt ()
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Siegfried K. Berninghaus: Universität Karlsruhe, Postal: RZ Zirkel 2 D-76128 Karlsruhe
Karl-Martin Ehrhart: Universitaet Karlsruhe, Postal: RZ Zirkel 2 D-76128 Karlsruhe
Bodo Vogt: Universität Magdeburg, Postal: Universitätsplatz 2 D-39106 Magdeburg

No 04-34, Sonderforschungsbereich 504 Publications from Sonderforschungsbereich 504, Universität Mannheim, Sonderforschungsbereich 504, University of Mannheim

Abstract: Inspired by the theoretical results on network formation by Bala and Goyal (2000) and experimental evidence by Plott and Callander (2002) and Falk and Kosfeld (2003) we design network formation experiments in discrete and continuous time. Particularly in the continuous time experiment, we observe that many groups not only reach a strict Nash network but also switch to other strict Nash networks during the course of time. Strict Nash networks, therefore, prove to be a good indicator for predicting network formation. In explaining our results, we highlight the role of the complexity of network structures, of inequity aversion, and the players� activity levels as most important determinants for forming strict Nash networks.

Pages: 31 pages
Date: 2004-07-13
Note: Financial support from the Deutsche Forschungsgemeinschaft, SFB 504, at the University of Mannheim, is gratefully acknowledged.
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