Experimental Economics

, Volume 9, Issue 3, pp 237–251 | Cite as

A network experiment in continuous time: The influence of link costs

  • Siegfried K. Berninghaus
  • Karl-Martin Ehrhart
  • Marion Ott


In recent work on non-cooperative network formation star-shaped networks play an important role. In a particular theoretical model of Bala and Goyal (2000) center-sponsored stars are the only strict Nash networks. In testing this theoretical model, Falk and Kosfeld (2003) do not find experimental evidence that players select the center-sponsored star. Based on a slight modification of Bala and Goyal’s model, we design a network formation experiment in which, depending on link costs, periphery-sponsored stars and the empty network are the only strict Nash networks. We observe that almost all groups not only reach a strict Nash network once but also switch the center player in periphery-sponsored stars several times. The main innovation in our experiment is to use a continuous time framework which we believe to be a more realistic setting to study behavior in network formation situations and which makes coordination on stars much easier than simultaneous strategy adaptation in discrete time.


Network formation Nash networks Real-time experiments 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

Supplementary material

10683_2006_Article_9125.pdf (97 kb)
Supplementary material (96.8 KB)


  1. Bala, V., & Goyal, S. (2000). A non-cooperative model of network formation. Econometrica, 68(5), 1181—1229CrossRefGoogle Scholar
  2. Berninghaus, S. K., & Ehrhart, K.-M. (1998). Time horizon and equilibrium selection in tacit coordination games: experimental results. Journal of Economic Behavior and Organization, 37, 231—248CrossRefGoogle Scholar
  3. Berninghaus, S. K., Ehrhart, K.-M., & Keser, C. (1999). Continuous-time strategy selection in linear population games. Experimental Economics, 2, 41—57Google Scholar
  4. Berninghaus, S. K., Ehrhart, K.-M., & Ott, M. (2005). A network experiment in continuous time: The influence of link costs. SFB504 Discussion Paper Series No. 05-02, University of Mannheim. &http://www.sfb504.uni-mannheim.de/publications/dsp05-02.pdf
  5. Berninghaus, S. K., Ehrhart, K.-M., Ott, M., & Vogt, B. (2004). Searching for “stars” — recent experimental results on network formation —. SFB504 Discussion Paper Series No. 04-34, University of Mannheim. &http://www.sfb504.uni-mannheim.de/publications/dp04-34.pdf
  6. Callander, S., & Plott, C. R. (2005). Principles of network development and evolution: an experimental study. Journal of Public Economics, 89, 1469—1495CrossRefGoogle Scholar
  7. Chmura, T., & Pitz, T. (2006). Successful strategies in repeated minority games. Physica A, 363, 477—480CrossRefGoogle Scholar
  8. Deck, C., & Johnson, C. (2004). Link bidding in laboratory networks. Review of Economic Design, 8, 359—372CrossRefGoogle Scholar
  9. Falk, A., & Kosfeld, M. (2003). It’s all about connections: evidence on network formation. IEW Working paper No. 146, University of ZürichGoogle Scholar
  10. Friedkin, N. E. (1983). Horizons of observability and limits of informal control in organizations. Social Forces, 62, 54—77CrossRefGoogle Scholar
  11. Goeree, J. K., Riedl, A., & Ule, A. (2005). In search of stars: network formation among heterogeneous agents. Working paperGoogle Scholar
  12. Goyal, S. (2005). Learning in networks. In G. Demange and M. Wooders (Eds.), Group Formation in Economics; Networks, Clubs and Coalitions, chapter 4. Cambridge University Press, Cambridge U.K.Google Scholar
  13. Granovetter, M. (1995). Getting A Job: A Study of Contacts and Careers. University of Chicago Press, 2nd editionGoogle Scholar
  14. Jackson, M. O. (2005). A survey of models of network formation: Stability and efficiency. In G. Demange and M. Wooders (eds.), Group Formation in Economics; Networks, Clubs and Coalitions, chapter 4. Cambridge U.K.: Cambridge University Press,Google Scholar
  15. Kosfeld, M. (2004). Economic networks in the laboratory: A survey. Review of Network Economics, 3, 20—41CrossRefGoogle Scholar
  16. McBride, M. (2006). Imperfect monitoring in communication networks. Journal of Economic Theory, 126, 97—119CrossRefGoogle Scholar
  17. Oberschelp, W. (1967). Kombinatorische Anzahlbestimmungen in Relationen. Mathematische Annalen, 174, 53—78CrossRefGoogle Scholar
  18. Rappaport, R. A. (1968). Pigs for the Ancestors. Yale University PressGoogle Scholar
  19. Rubel, P. G., & Rosman, A. (1978). Your Own Pigs You May Not Eat. The University of Chicago PressGoogle Scholar
  20. Selten, R., Schreckenberg, M., Pitz, T., Chmura, T., & Kube, S. (2006). Commuters route choice behaviour. Games and Economic Behavior. ForthcomingGoogle Scholar

Copyright information

© Economic Science Association 2006

Authors and Affiliations

  • Siegfried K. Berninghaus
    • 1
  • Karl-Martin Ehrhart
    • 1
  • Marion Ott
    • 1
  1. 1.University of Karlsruhe, Institute WiORKarlsruhe

Personalised recommendations