A Network Experiment in Continuous Time

Siegfried K. Berninghaus (), Karl-Martin Ehrhart () and Marion Ott
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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

No 05-02, Sonderforschungsbereich 504 Publications from Sonderforschungsbereich 504, Universität Mannheim, Sonderforschungsbereich 504, University of Mannheim

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.

Pages: 37 pages
Date: 2005-01-31
Note: We thank Sanjeev Goyal, Oliver Kirchkamp, Karim Sadrieh, Reinhard Selten, and Bodo Vogt for helpful comments.
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