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An Experimental Study of Network Formation with Limited Observation

Author

Listed:
  • Michael Caldara

    (Economic Science Institute, Chapman University)

  • Michael McBride

    (Department of Economics, University of California-Irvine)

Abstract
Many social and economic networks emerge among actors that only partially observe the network when forming network ties. We ask: what types of network architectures form when actors have limited observation, and does limited observation lead to less efficient structures? We report numerous results from a laboratory experiment that varies both network observation and the cost of forming links. Overall, we find that limited network observation does not inevitably lead to highly inefficient networks but instead might actually inhibit inefficient positional jockeying among actors.

Suggested Citation

  • Michael Caldara & Michael McBride, 2014. "An Experimental Study of Network Formation with Limited Observation," Working Papers 141501, University of California-Irvine, Department of Economics.
    • Handle: RePEc:irv:wpaper:141501
    as

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    File URL: https://www.economics.uci.edu/files/docs/workingpapers/2014-15/14-15-01.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Gaudeul, Alexia & Giannetti, Caterina, 2015. "Privacy, trust and social network formation," University of Göttingen Working Papers in Economics 269, University of Goettingen, Department of Economics.
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    3. Gaudeul, Alexia & Giannetti, Caterina, 2017. "The effect of privacy concerns on social network formation," Journal of Economic Behavior & Organization, Elsevier, vol. 141(C), pages 233-253.

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    More about this item

    Keywords

    Networks; Limited observation; Coordination;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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