Myopic or Farsighted? An Experiment on Network Formation

30 Pages Posted: 14 Mar 2011

See all articles by Georg Kirchsteiger

Georg Kirchsteiger

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES); CESifo (Center for Economic Studies and Ifo Institute)

Marco Mantovani

affiliation not provided to SSRN

Ana Mauleon

Université Saint-Louis - Bruxelles; Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE)

Vincent J. Vannetelbosch

Center for Operations Research and Econometrics (CORE)

Multiple version iconThere are 2 versions of this paper

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

Kirchsteiger, Georg and Mantovani, Marco and Mauleon Echeverria, Ana Carmen and Vannetelbosch, Vincent J., Myopic or Farsighted? An Experiment on Network Formation (February 2011). CEPR Discussion Paper No. DP8263. Available at SSRN: https://ssrn.com/abstract=1782557

Georg Kirchsteiger (Contact Author)

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES) ( email )

Av. F. D. Roosevelt 50
CP 114
Brussels, B-1050
Belgium

HOME PAGE: http://www.ecares.org/people/members/kirchsteiger/kirchsteiger/home.htm

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Marco Mantovani

affiliation not provided to SSRN ( email )

Ana Carmen Mauleon Echeverria

Université Saint-Louis - Bruxelles ( email )

Brussels, 1000
Belgium

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
B-1348 Louvain-la-Neuve, b-1348
Belgium

Vincent J. Vannetelbosch

Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
1348 Louvain-la-Neuve, 1348
Belgium

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