Ulric B. and Evelyn L. Bray Social Sciences Seminar

Abstract: Large scale social networks are a defining feature of contemporary economy and society. Empirical research suggests that many such networks exhibit a law of the few: the distribution of connections is very unequal. Given the social and economic implications of this inequality, it is is important to understand the principles underlying the formation of these networks. The economic approach to network formation takes the view that individuals compare the costs and benefits of linking. A general take away from this research is that purposeful linking activity can lead to highly unequal network. Moreover, these networks are efficient. Existing experiments show that experimental subjects do not create such networks thus raising a general question about the ability of an economic approach to understanding networks. A common feature of these experiments is that the number of subjects is small (typically ranging between 4 and 8). Moreover, practically all the experiments require subjects to make simultaneous choices in discrete time. We develop a new experimental platform that integrates a network visualization tool with interactive asynchronous choices in continuous time. The platform allows for large groups of up to 100 subjects in the laboratory. The platform is used to test well known models of network formation. Our experiments offer robust evidence for the emergence of highly unequal networks.