MelÃ©ndez-JimÃ©nez, Miguel A
|Keywords:||Social and Behavioral Sciences|
We study behavior and equilibrium selection in network games. We conduct a series of experiments (with 580 participants) in which actions are either strategic substitutes or strategic complements, and participants have either complete or incomplete information about the structure of a random network. In our initial set of experiments on 5-person networks, we find a great deal of qualitative and quantitative support for the theoretical predictions of the Galeotti, Goyal, Jackson, Vega-Redondo, and Yariv (2010) model. The degree of equilibrium play is striking, in particular with incomplete information. There are intriguing patterns in our data, such as a taste for positive payoffs (but also security) when this supports the choice of one of the potential equilibria in a complete-information setting. To shed further light on the underpinnings of behavior and equilibrium selection in the laboratory, we study three more 5-person networks and test robustness by conducting sessions with three 20-person networks. Overall, we see strong evidence that choices and the equilibrium played depend on one’s degree and the connectivity of the network, and suggestive evidence that choices also depend on the clustering in the network.
JEL Codes: C71, C91, D03, D85
Keywords: Random networks; Incomplete information; Connectivity; Clustering; Strategic substitutes; Strategic complements; Experiment