In search of stars
Subtitle: network formation among heterogeneous agents
By: by Jacob K. Goeree, Arno Riedl, Aljaz Ule.
Contributors: Riedl, Arno.
Series: Discussion paper ;; no. 1754; Discussion paper (Forschungsinstitut zur Zukunft der Arbeit : Online) ;; no. 1754
Publisher: IZA
Published: 2005
Place of publication: Bonn, Germany
Language: eng
Format: Electronic resource
Subjects: Business networks.; Social networks.
Description: "This paper reports the results of a laboratory experiment on network formation among heterogeneous agents. The experimental design extends the basic Bala-Goyal (2000) model of network formation with decay and two-way flow of benefits by allowing for agents with lower linking costs or higher benefits to others. We consider treatments where agents' types are common knowledge and treatments where agents' types are private information. In all treatments, the (efficient) equilibrium network has a "star" structure. We find that with homogeneous agents, equilibrium predictions fail completely. In contrast, with heterogeneous agents stars frequently occur, often with the high-value or low-cost agent in the center. Stars are not borne but rather develop: in treatments with a high-value agent, the network's centrality, stability, and efficiency all increase over time. Our results suggest that agents' heterogeneity is a major determinant for the predominance of star-like structures in real-life social networks"--Forschungsinstitut zur Zukunft der Arbeit web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 9/28/2005.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.