Myopic or Farsighted? An Experiment on Network Formation
30 Pages Posted: 14 Mar 2011
There are 2 versions of this paper
Myopic or Farsighted? An Experiment on Network Formation
Date Written: February 2011
Abstract
Pairwise stability (Jackson and Wolinsky, 1996) is the standard stability concept in network formation. It assumes myopic behavior of the agents in the sense that they do not forecast how others might react to their actions. Assuming that agents are farsighted, related stability concepts have been proposed. We design a simple network formation experiment to test these theories. Our results provide support for farsighted stability and strongly reject the idea of myopic behavior.
Keywords: experiment, myopic and farsighted stability, Network formation
JEL Classification: C91, C92, D85
Suggested Citation: Suggested Citation
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