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Network Formation and Disruption - An Experiment. Are efficient networks too complex?

Author

Listed:
  • Sonja Brangewitz

    (Paderborn University)

  • Behnud Mir Djawadi

    (Paderborn University)

  • Angelika Endres

    (Paderborn University)

  • Britta Hoyer

    (Paderborn University)

Abstract

We experimentally study the emergence of networks under a known external threat. To be more specific, we deal with the question if subjects in the role of a strategic Designer are able to form safe and efficient networks while facing a strategic Adversary who is going to attack their networks. This investigation relates theoretical predictions by Dziubinski and Goyal (2013) to actual observed behaviour. Varying the costs for protecting nodes, we designed and tested two treatments with different predictions for the equilibrium network. Furthermore, the in fluence of the subjects' farsightedness on their decision- making process was elicited and analysed. We find that while subjects are able to build safe networks in both treatments, equilibrium networks are only built in one of the two treatments. In the other treatment, predominantly safe networks are built but they are not efficient. Additionally, we find that farsightedness -as measured in our experiment- has no in fluence on whether subjects are able to build safe or efficient networks.

Suggested Citation

  • Sonja Brangewitz & Behnud Mir Djawadi & Angelika Endres & Britta Hoyer, 2017. "Network Formation and Disruption - An Experiment. Are efficient networks too complex?," Working Papers CIE 101, Paderborn University, CIE Center for International Economics.
    • Handle: RePEc:pdn:ciepap:101
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    References listed on IDEAS

    as
    1. Bravard, Christophe & Charroin, Liza & Touati, Corinne, 2017. "Optimal design and defense of networks under link attacks," Journal of Mathematical Economics, Elsevier, vol. 68(C), pages 62-79.
    2. Venkatesh Bala & Sanjeev Goyal, 2000. "A Noncooperative Model of Network Formation," Econometrica, Econometric Society, vol. 68(5), pages 1181-1230, September.
    3. Dan Kovenock & Brian Roberson, 2015. "The Optimal Defense of Network Connectivity," Working Papers 15-24, Chapman University, Economic Science Institute.
    4. Marco Pelliccia, 2020. "Decentralized Defence of a (Directed) Network Structure," Defence and Peace Economics, Taylor & Francis Journals, vol. 31(6), pages 659-676, August.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Britta Hoyer & Stephanie Rosenkranz, 2018. "Determinants of Equilibrium Selection in Network Formation: An Experiment," Games, MDPI, vol. 9(4), pages 1-25, November.

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    More about this item

    Keywords

    Networks; Experiment; Network Design; Network Defence; Network Disruption;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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