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Principles of network development and evolution: an experimental study

Callander, Steven and Plott, Charles R. (2005) Principles of network development and evolution: an experimental study. Journal of Public Economics, 89 (8). pp. 1469-1495. ISSN 0047-2727. doi:10.1016/j.jpubeco.2004.03.009.

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This paper reports on an experimental investigation of the evolution of networks and the individual decision-making processes that guide it. Inasmuch as there is no history of experimental work on network formation, part of the paper is devoted to the formulation of problems that can be examined experimentally. The results are that networks, composed of decentralized decision makers, are capable of overcoming complex coordination and learning problems and converge to stationary when it does not occur, significant and persistent inefficiencies can result. The models of equilibration based on the principle of Nash equilibrium are more reliable than models based on the alternative principles of efficiency seeking or focalness of the network configuration. However, individual decision making within networks is not in accordance with the simple decision rules of Nash best response. Instead, we observed complicated strategies that appear to trade short-term profits in order to signal to and teach other agents the strategies required for long-term profit maximization.

Item Type:Article
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URLURL TypeDescription DOIArticle ItemWorking Paper
Additional Information:© 2004 Elsevier B.V. Received 6 May 2003; received in revised form 24 March 2004; accepted 29 March 2004. The financial support of the Laboratory of Experimental Economics and Political Science at Caltech is gratefully acknowledged.
Group:Social Science Working Papers
Funding AgencyGrant Number
Caltech Laboratory of Experimental Economics and Political ScienceUNSPECIFIED
Subject Keywords:decision making, Nash equilibrium, profit
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Other Numbering System NameOther Numbering System ID
Social Science Working Paper1156R
Issue or Number:8
Record Number:CaltechAUTHORS:20140220-135341159
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Official Citation:Steven Callander, Charles R. Plott, Principles of network development and evolution: an experimental study, Journal of Public Economics, Volume 89, Issue 8, August 2005, Pages 1469-1495, ISSN 0047-2727, (
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:43910
Deposited On:20 Feb 2014 22:44
Last Modified:10 Nov 2021 16:45

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