This paper develops a formal model of exchange network stability that combines expected value theory (Friedkin 1995) with the economic literature on network dynamics. We identify stable networks up to size 8 for varying costs and investigate whether they are Pareto efficient and egalitarian....

We study the emergence of conventions in dynamic networks experimentally. Conventions are modeled in terms of coordination games in which actors can choose both their behavior and their interaction partners. We study how macro-level outcomes of the process in terms of Pareto-efficiency and...

The paper discusses a laboratory experiment in which pairs of trustors play finitely repeated Trust Games with the same trustee. We study trustfulness of the trustors as well as trustworthiness of the trustee. We distinguish between learning and control effects on trustfulness and...

Literature on network formation typically assumes that people create and remove relations as to maximize their outcome in the network. It is mostly neglected that people might also care about the outcomes of others when creating and removing links. In the current paper, we develop an experiment...

Our research starts from the assumption that actors use a single decision theory to guide them on how to behave in all possible one-shot two-person encounters. To address which decision theories perform well, we let 17 theories compete in a large number of randomly selected symmetric 2×2 games....

Existing methods for predicting resource divisions in laboratory exchange networks do not take into account the sequential nature of the experimental setting. We extend network exchange theory by considering sequential exchange. We prove that Sequential Power-Dependence Theory - unlike...

Contracts commit individuals to a future course of action and create feelings of entitlement on the parties. In a contractual gap, parties’ duties and rights are not univocal, and while promisors will often feel entitled to breach, promisees will feel entitled to receive the promised...

When entrepreneurs enter structural holes in networks, they can exploit the related benefits. Evidence for these benefits has steadily accumulated. The authors ask whether those who strive for such structural advantages can maintain them if others follow their example. Burt speculates that they...

Game-theoretic models of network formation typically assume that people create relations so as to maximize their own outcome in the network. Recent experiments on network formation suggest that the assumption of self-interest might be unwarranted and that social preferences, such as altruism and...