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CESS Experimental Economics Seminar website
Large scale social networks are a defining feature of contemporary economy and society. These networks have distinctive structures. Economic theory shows that network structures have powerful effects on human behavior and aggregate outcomes. It is therefore important to understand the process of network formation. The economic approach to network formation takes the view that individuals compare the costs and benefits of linking. A general take away from this research is that purposeful linking activity can lead to highly unequal network. Moreover, these networks are efficient. However, a variety of other networks can arise in equilibrium. This tension between inequality and efficiency and the multiplicity of equilibrium creates a space for experimental investigation.