Abstract
Field studies of networks have uncovered a preference to befriend people we perceive as similar according to some dimensions of our identity (“homophily”). Lab studies of network formation games have found that adherence to social norms of reciprocity and inequity aversion are also drivers of network choices. No study so far has attempted to investigate the role of both homophily and social norms in a controlled environment. At the beginning of our experiment, each player fills in a personal profile. Each player then views the profile of all other players and expresses a degree of perceived similarity between his/her profile and the profile of the other player. At this point, a repeated network formation game ensues. We find that: (1) potential homophily considerations triggered by the profile rating task did not measurably change the players’ behavior compared to the baseline; (2) reciprocity plays a significant role in the formulation of the players’ strategies, in particular lowering the probability that the player naively best responds to the network observed in the previous period. We speculate that reciprocation of past choices might be a more “available” aid in strategy-formulation than considerations related to the similarity of the other players.
Highlights
Previous literature has tried to isolate the determinants of behavior observed in social networks.A robust finding is that people tend to choose friends who are similar to them, a phenomenon that the the literature since [1] calls “homophily”, the subject of a vast scholarship.1 In an influential study using data from American high schools, Currarini et al [9] found that homophily is widespread, especially within the Caucasian and African-American subpopulations
While adherence to social norms is a traditional territory of inquiry for experimental economics, studying homophily in the laboratory is a novel aspect of our study, and it presents several challenges
We study the role of homophily and adherence to social norms in a novel experimental framework
Summary
Previous literature has tried to isolate the determinants of behavior observed in social networks.A robust finding is that people tend to choose friends who are similar to them, a phenomenon that the the literature since [1] calls “homophily”, the subject of a vast scholarship. In an influential study using data from American high schools, Currarini et al [9] found that homophily is widespread, especially within the Caucasian and African-American subpopulations. Previous literature has tried to isolate the determinants of behavior observed in social networks. The theoretical model presented in this paper shows that to generate homophily, one needs both biased preferences and a matching technology that is biased towards people with whom we share features. Cf., among many others, [2], discussing how homophily shapes the information channels and human sociality of the decision makers; [3] for a theoretical model that can accommodate type-dependent biases in network-based searches for connections; [4,5] for personalization in content retrieval on the web; [6], discussing the role of homophily to improve recommendation performance on the web; [7], studying homophily in recommendations on social media; [8], studying the relationship between homophily in the choice of instrumental relationships and performance in knowledge-intensive organizations.
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