Heuristic Decision Making in Network Linking
2015
textabstractNetwork formation among individuals constitutes an important part of many OR
processes, but relatively little is known about how individuals make their linking decisions
in networks. This article provides an investigation of heuristic effects in individual
linking decisions for network formation in an incentivized lab-experimental setting.
Our mixed logit analysis demonstrates that the inherent complexity of the network
linking setting causes individuals’ choices to be systematically less guided by payoff
but more guided by simpler heuristic decision cues, and that this shift is systematically
stronger for social payoff than for own payoff. Furthermore, we show that the specific
complexity factors value transferability and social tradeoff aggravate the former effect.
These heuristic effects have important research and policy implications in areas that
involve network formation.
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