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Myopic or Farsighted? An Experiment on Network Formation
Marco Mantovani, Università degli Studi di Milano and Université Libre de Bruxelles
Georg Kirchsteiger, ECARES, Université Libre de Bruxelles, ECORE, CEPR, and CESifo
Ana Mauleon, FNRS and CEREC, Facultés universitaires Saint-Louis and FNRS and CORE, Université catholique de Louvain
Vincent Vannetelbosch, FNRS and CORE, Université catholique de Louvain
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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.

SUGGESTED CITATION:
Marco Mantovani, Georg Kirchsteiger, Ana Mauleon, and Vincent Vannetelbosch, "Myopic or Farsighted? An Experiment on Network Formation" (June 14, 2011). Fondazione Eni Enrico Mattei Working Papers. Working Paper 596.
http://www.bepress.com/feem/paper596