Myopic or Farsighted? An Experiment on Network Formation

32 Pages Posted: 24 Jun 2011

See all articles by Marco Mantovani

Marco Mantovani

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS); Facultés Universitaires Saint Louis à Bruxelles - CEREC

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)

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: June 24, 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: network formation, experiment, myopic and farsighted stability

JEL Classification: D85, C91, C92

Suggested Citation

Mantovani, Marco and Kirchsteiger, Georg and Mauleon Echeverria, Ana Carmen and Vannetelbosch, Vincent J., Myopic or Farsighted? An Experiment on Network Formation (June 24, 2011). FEEM Working Paper No. 45.2011. Available at SSRN: https://ssrn.com/abstract=1871709 or http://dx.doi.org/10.2139/ssrn.1871709

Marco Mantovani (Contact Author)

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milan, 20126
Italy

Facultés Universitaires Saint Louis à Bruxelles - CEREC ( email )

Brussels, 1000
Belgium
+32 2 7923551 (Phone)

Georg Kirchsteiger

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

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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