Abstracts of current working papers

This version: August 2013.

Abstract. This paper proposes a dynamic model of bargaining to analyze decentralized markets where buyers and sellers obtain information about past deals through their social network. We show that groups with high density and/or low variability in the number of connections across individuals allow their members to obtain a better deal. We test the theoretical predictions with a lab experiment where we investigate 4 treatments that vary the network that groups of 6 subjects are assigned to. The results of the experiment lend support to the theoretical predictions: subjects converge to a high equilibrium demand if they are assigned to a network that is dense and/or has low variability in number of connections across members.

Keywords: network, communication, experiment, noncooperative bargaining. JEL: C73, C78, C91, C92, D83.

Whatever it takes: Rivalry and unethical behavior (joint with Gavin Kilduff,  Adam Galinsky and James J. Reade)

This version: June 2012.

Abstract.  We investigate rivalry as a driver of unethical behavior. We first distinguish it from general competition, both conceptually and in terms of its consequences for behavior. Then, across four experiments and one archival study, we find evidence that rivalry fuels greater unethical behavior than general competition. Specifically, rivalry was associated with increased Machiavellianism, over-reporting of performance, willingness to employ unethical negotiation tactics, and unsportsmanlike behavior. Further, several of these effects carried over to subsequent situations that occurred outside of the rivalrous relationship itself, suggesting that rivalry activates a mindset that can subsequently influence unrelated decisions and behaviors. These findings highlight the importance of rivalry as a widespread, powerful, and yet largely unstudied phenomenon with significant organizational implications. Further, they help to inform when and why unethical behavior occurs within organizations, and ultimately suggest that the nature of competition is dependent upon actors’ relationships and prior interactions.

Network cognition (joint with Roberta Dessi and Sanjeev Goyal)

This version: November 2012.

Abstract. We study individual ability to memorize and recall information about friendship networks using a combination of experiments and survey-based data. In the experiment subjects are shown a network, in which their location is exogenously assigned, and they are then asked questions about the network after it disappears. We find that subjects exhibit three main cognitive biases: (i) they underestimate the mean degree compared to the actual network; (ii) they overestimate the number of rare degrees; (iii) they underestimate the number of frequent degrees. We then analyze survey data from two `real' friendship networks from a Silicon Valley firm and from a University Research Center. We find, somewhat remarkably, that individuals in these real networks also exhibit these biases. The experiments yield three further findings: (iv) network cognition is affected by the subject's location, (v) the accuracy of network cognition varies with the nature of the network, and (vi) network cognition has a significant effect on economic decisions.

Keywordsnetwork cognition, friendship networks, cognitive biases.