Gergely Horváth

We experimentally study effort provision and network formation in the linear-quadratic game characterised by positive externality and complementarity of effort choices among network neighbours. We compare experimental outcomes to the equilibrium and efficient allocations and study the impact of group size and linking costs. We find that individuals overprovide effort relative to the equilibrium level on the network they form. However, their payoffs are lower than the equilibrium payoffs because they create fewer links than is optimal, which limits the beneficial spillover effects of effort provision. Reducing the linking costs does not significantly increase the connectedness of the network and the welfare loss is higher in larger groups. Individuals connect to the highest-effort providers in the group and ignore links to relative low-effort providers, even if those links would be beneficial to form. This effect explains the lack of links in the network.

We experimentally study effort provision and network formation in the linear-quadratic game characterized by positive externality and complementarity of effort choices among network neighbors. We compare experimental outcomes to the equilibrium and efficient allocations and study the impact of group size and linking costs. We find that individuals overprovide effort relative to the equilibrium level on the network they form. However, their payoffs are lower than the equilibrium payoffs because they create fewer links than it is optimal which limits the beneficial spillovers of effort provision. Reducing the linking costs does not significantly increase the connectedness of the network and the welfare loss is higher in larger groups. Individuals connect to the highest effort providers in the group and ignore links to relative low effort providers, even if those links would be beneficial to form. This effect explains the lack of links in the network.

We study whether competition for social status induces higher effort provision and efficiency when individuals collaborate with their network neighbors. We consider a laboratory experiment in which individuals choose a costly collaborative effort and their network neighbors. They benefit from their neighbors' effort and effort choices of direct neighbors are strategic complements. We introduce two types of social status in a 2x2 factorial design: 1) individuals receive monetary benefits for incoming links representing popularity; 2) they receive feedback on their relative payoff ranking within the group. We find that link benefits induce higher effort provision and strengthen the collaborative ties relative to the Baseline treatment without social status. In contrast, the ranking information induces lower effort as individuals start competing for higher ranking. Overall, we find that social status has no significant impact on the number of links in the network and the efficiency of collaboration in the group.

We experimentally study the effectiveness of policy interventions in reducing the negative welfare effects of behavioral biases on job search. Due to quasi-hyperbolic discounting, individuals reduce their search effort and reservation wage, while the sunk-cost fallacy makes individuals decrease their reservation wage over the search spell. We compare the effects of search cost reduction and nudging. We find that search cost reduction increases the search effort and payoffs but not the reservation wage. Conversely, nudging increases the reservation wage, but not the search effort or payoffs. Both interventions reduce the impact of the sunk-cost fallacy on the reservation wage.

We study the impact of social networks on the workers' labor market participation. We assume that individuals are heterogeneous with respect to the value of home production, which determines who participates in the labor market. Active individuals strategically form social links to obtain job information where the opportunity cost of networking is the value of home production. We find that social networking increases the labor market participation because it raises the probability to find a job. However, the equilibrium level of participation is lower than the socially optimal level. Social networking creates negative externalities, if social policies fix these externalities, the labor market participation rate will increase. Further, we show that when social networking becomes more efficient, the inequality between active individuals increases.

This paper studies the impact of marital status on job finding in China using the correspondence methodology. Fictitious CVs are sent to job advertisements through an online job board website, focusing on financial and accounting jobs, and the callback rate is measured. We vary the gender and marital status on otherwise identical CVs. The previous literature suggests that being married has a negative impact on the labor market outcomes of females, but a positive impact for males. In contrast, for the Chinese labor market, we do not find a significant effect of marital status on job finding for either gender.