Correlated Equilibrium in Network Formation and its Experiment
Ichiro Nishizaki, Tomohiro Hayashida, Rika Kambara
So far, it has been tried to explain the behavior on experimental subjects in experiments on network formation by a solution concept of the strict Nash equilibrium. In this paper, we consider the correlated equilibrium for network formation which is a solution concept based on stability in terms of expected payoff maximization assuming coordination or implicit agreement between players. To examine its validity, we conduct a laboratory experiment and try to explain the behavior of the experimental subjects. As a result of the experiment, we find that although the explanation by the strict Nash equilibrium is difficult, it is possible to explain by the correlated equilibrium or inequity aversion.