networkin’ it
DESCRIPTION
Principles of Network Development and Evolution: An Experimental Study A review of the paper by Callander and Plott by Kash Barker. Callander, S., and C.R. Plott. 2005. Principles of Network Development and Evolution: An Experimental Study. Journal of Public Economics . Vol. 89. pp. 1469-1495. - PowerPoint PPT PresentationTRANSCRIPT
![Page 1: Networkin’ it](https://reader035.vdocument.in/reader035/viewer/2022062723/56813c0d550346895da57ed5/html5/thumbnails/1.jpg)
Callander, S., and C.R. Plott. 2005. Principles of Network Development and Evolution: An Experimental Study. Journal of Public Economics. Vol. 89. pp. 1469-1495.
Principles of Network Development and Evolution:
An Experimental Study
A review of the paper by Callander and Plottby
Kash Barker
![Page 2: Networkin’ it](https://reader035.vdocument.in/reader035/viewer/2022062723/56813c0d550346895da57ed5/html5/thumbnails/2.jpg)
Networkin’ it
• Networks used to describe many physical systems and theoretical environments– paper cites labor market participation,
internal organization of firms, social interactions
– what principles guide the unregulated development and evolution of networks?
![Page 3: Networkin’ it](https://reader035.vdocument.in/reader035/viewer/2022062723/56813c0d550346895da57ed5/html5/thumbnails/3.jpg)
Questions addressed here
• Do networks converge to steady state outcomes and what are the properties of this state?
• What principles underlie network development and evolution?
• How can these principles be understood in the context of individual decisions and behavior?
![Page 4: Networkin’ it](https://reader035.vdocument.in/reader035/viewer/2022062723/56813c0d550346895da57ed5/html5/thumbnails/4.jpg)
Preliminaries
• Network is a set of connected nodes– each node is a separated decisionmaking
agent
– links represent a transfer of “stuff”• node B connects to node A to receive a benefit
at some cost
– flow of stuff is “without decay”
– network structure is common knowledge to each agent
![Page 5: Networkin’ it](https://reader035.vdocument.in/reader035/viewer/2022062723/56813c0d550346895da57ed5/html5/thumbnails/5.jpg)
Principles
• Three principles of network formation– Nash equilibrium
• no individual can improve personal gains by some unilateral change of action
– efficiency• proportion of gains received relative to
potential gains
– focalness• refers to geographic location in the experiment
![Page 6: Networkin’ it](https://reader035.vdocument.in/reader035/viewer/2022062723/56813c0d550346895da57ed5/html5/thumbnails/6.jpg)
Types of networks
wheel
counterclockwise wheel
![Page 7: Networkin’ it](https://reader035.vdocument.in/reader035/viewer/2022062723/56813c0d550346895da57ed5/html5/thumbnails/7.jpg)
Types of networks
an efficient nonfocal wheel
an efficient star
![Page 8: Networkin’ it](https://reader035.vdocument.in/reader035/viewer/2022062723/56813c0d550346895da57ed5/html5/thumbnails/8.jpg)
Sets of parameters• Authors used four sets of parameters for link
connection cost and for the value of information
![Page 9: Networkin’ it](https://reader035.vdocument.in/reader035/viewer/2022062723/56813c0d550346895da57ed5/html5/thumbnails/9.jpg)
Model predictions• For each set of parameters, the following
network types were predicted for each principle
![Page 10: Networkin’ it](https://reader035.vdocument.in/reader035/viewer/2022062723/56813c0d550346895da57ed5/html5/thumbnails/10.jpg)
Comparisons
![Page 11: Networkin’ it](https://reader035.vdocument.in/reader035/viewer/2022062723/56813c0d550346895da57ed5/html5/thumbnails/11.jpg)
Types of networks
wheel
counterclockwise wheel
![Page 12: Networkin’ it](https://reader035.vdocument.in/reader035/viewer/2022062723/56813c0d550346895da57ed5/html5/thumbnails/12.jpg)
Types of networks
an efficient nonfocal wheel
an efficient star
![Page 13: Networkin’ it](https://reader035.vdocument.in/reader035/viewer/2022062723/56813c0d550346895da57ed5/html5/thumbnails/13.jpg)
Experimental background• Six participants (nodes)• Consisted of “rounds” during which
subjects could make connection with another subject at a cost– convergence occurred if same
configuration appeared in three consecutive rounds
• Two “series” performed– series 1 used parameter set 1– series 2 used parameter sets 2, 3, 4
![Page 14: Networkin’ it](https://reader035.vdocument.in/reader035/viewer/2022062723/56813c0d550346895da57ed5/html5/thumbnails/14.jpg)
Result 1
• Networks happen, with an appreciation of externalities is incorporated into agent decisions– in each experiment, a network
instantaneously formed
– given appropriate conditions, social or economic network will emerge
![Page 15: Networkin’ it](https://reader035.vdocument.in/reader035/viewer/2022062723/56813c0d550346895da57ed5/html5/thumbnails/15.jpg)
Result 2
• (i) Networks tend to converge to stationary configurations, (ii) Nash equilibrium is necessary condition for stationarity– (i) eight of 12 networks converged
– (ii) all eight convergent networks are Nash equilibria
![Page 16: Networkin’ it](https://reader035.vdocument.in/reader035/viewer/2022062723/56813c0d550346895da57ed5/html5/thumbnails/16.jpg)
Result 3
• Each of focalness, efficiency, and strict Nash equilibrium can be rejected as being necessary for configuration to become stationary– one experiment converged to nonfocal,
inefficient configuration in rounds 16-18
– one experiment converged to nonfocal wheel in rounds 17-19
– one experiment converged to weak Nash equilibrium configuration
![Page 17: Networkin’ it](https://reader035.vdocument.in/reader035/viewer/2022062723/56813c0d550346895da57ed5/html5/thumbnails/17.jpg)
Result 4
• Principle of Nash equilibrium does not prove a sufficient condition for configuration to be stationary– weak Nash configurations that did not
prove stable were played in six experiments
– strict Nash configurations not proving stable were played in 3 experiments
![Page 18: Networkin’ it](https://reader035.vdocument.in/reader035/viewer/2022062723/56813c0d550346895da57ed5/html5/thumbnails/18.jpg)
Result 5
• Nonconvergent networks do not exhibit increasing efficiency
– dynamics of network evolution and change are not guided by a principle of efficiency seeking
![Page 19: Networkin’ it](https://reader035.vdocument.in/reader035/viewer/2022062723/56813c0d550346895da57ed5/html5/thumbnails/19.jpg)
Al fin