Matching and Network Effects

Individuals form teams to produce an output. The quality and quantity of a team's output depends on the ability and the effort level of its members. The ability of individuals as well as their work ethic is however imperfectly known. In such an environment, individuals wishing to form a new team can get information about each other from the network of past collaborators. The paper carries out an empirical examination of the existence and magnitude of this network effect. This empirical work looks at the formation of coauthor relations among economists over a twenty year period. Our principal finding is that a new collaboration emerges faster among two researchers if they are 'closer' in the existing coauthor network among economists. This proximity effect on collaboration is strong: being at a network distance of 2 instead of 3, for instance, raises the probability of initiating a collaboration by 29 percent. However, proximity has no effect on subsequent collaboration among the two individuals. Thus the coauthor network acts as a 'referral' mechanism among economists