Agent-based simulation analysis for network formation

Abstract

Bala and Goyal (2000) have constructed a mathematical model of network formation leading a center sponsored star network to be strict Nash Equilibrium. Basing on the model, Berninghaus et al. (2007) have conducted the laboratory experiments using human subjects . The result of the experiments indicates that peripheral sponsored star networks which are predicted as the strict Nash Equilibrium are not always stable. The partial subjects deviate from the Equilibrium strategies and several kinds of star networks with different central player are formed. One of the reasons why such process of the network formation is observed, the mechanisms of human are not always rational but also make decision through trail and error, occasionally. In this paper, we analyze the cause of the deviation from the Nash equilibrium by using agent-based simulation system.