Social context and network formation: An experimental study

Recently, there has been increasing interest in determining which social network structures emerge as a consequence of the conscious actions of actors. Motivated by the belief that “networks matter” in reaching personal objectives, it is a natural assumption that actors try to optimize their network position. Starting from the notion that an optimal network position depends on the social context, we examine how actors change their networks to reach better positions in various contexts. Distinguishing between three social contexts (a neutral context, a context in which closed triads are costly, and a context in which closed triads are beneficial), theoretical results predict that emerging networks are contingent on the incentives that are present in these contexts. Experiments are used to test whether networks that are theoretically predicted to be stable are also stable experimentally. We find that emerging networks correspond to a large extent with the predicted networks. Consequently, they are contingent on the incentives present in various social contexts. In addition, we find that subjects tend to form specific stable networks with a higher probability than predicted, namely, efficient networks and networks in which everyone is equally well off.