Research
Topic 1: Social Network Formation and Evolution
Endogenous Network Formation in Local Public Goods: An Experimental Analysis.
We experimentally explore public good production levels, and the endogenous formation of network structures to facilitate output sharing, among agents with heterogeneous production costs or valuations. Results corroborate the key theoretical insights of Kinateder & Merlino (2017) characterizing how agents form core-periphery networks. However, subjects often produce more and form denser networks than predicted, which sometimes reduces efficiency. There is some tendency for behaviour to converge towards the theoretical equilibrium over repeated play. Our results help us understand the emergence of the ‘law of the few’ in real-world networks, and suggest it is driven by endogenous sorting of heterogeneous agents.
Topic 2: Social Network Formation and Evolution
Social Identity and Network Formation
Using a laboratory experiment, we study the evolution of economic networks in the context of fragmented social identity. We create societies in which members can initiate and delete links to others, and then earn payoffs from a public goods game played within their network. We manipulate whether the society initially consists of segregated or integrated identity groups, and vary whether societal mobility is high or low. Results show in-group favouritism in network formation. The effects of original network structure are long-lasting, with initially segregated societies permanently exhibiting more homophilic networks than initially integrated ones. Moreover, allowing greater social mobility results in networks becoming less rather than more integrated. This occurs in part because eviction from networks is based on out-group hostility when societal mobility is high, and on punishing free riders when mobility across groups is low.