Positional concerns and social network structure: An experiment

Abstract

Abstract We experimentally study the positional concerns of individuals embedded in social networks. In the game, individuals compete for positional advantage with their direct neighbors by purchasing a positional good. The Nash equilibrium consumption is determined by the Katz-Bonacich centrality of the individual's network position, while the efficient outcome requires a lower consumption level. For most network positions, the gameplay converged to the Nash equilibrium, except for local centers that consumed less of the positional good than the Nash prediction. Despite this, the consumption of the positional good increased in the individual's centrality. The evolution of the gameplay was explained by the myopic best-response dynamics model.