Social Networks and Employment- An Experimental Analysis

There is robust field data showing that a frequent and successful way of looking fora job is via the intermediation of friends and relatives. Here we want to explore thisexperimentally. Participants first play a simple public good game with two interactionpartners ("friends"), and share whatever they earn this way with two differentsharing partners ("cousins") who in turn have different friends. Thus a participant'ssocial network contains two "friends" and two "cousins". In the second phase of theexperiment participants learn about a job opportunity for themselves and one additionalvacancy and decide whom of their network they want to recommend and, ifso, in which order. In case of coemployment, both employees compete for a bonus.Will others be recommend for the additional job in spite of this competition, will"friends" or "cousins"be preferred and how does this depend on contributions (of"friends") or shared profits (with "cousins")? Our findings are partly puzzling. Mostparticipants, for instance, recommend quite actively but compete very fiercely forthe bonus.