Network Cognition

Abstract

We study individual ability to memorize and recall information about friendship networks using a combination of experiments and survey-based data. In the experi- ment 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.

Replaced by

Roberta Dessi, Edoardo Gallo, and Sanjeev Goyal, “Network Cognition”, Journal of Economic Behavior and Organization, vol. 163, March 2016, pp. 78–96.

Reference

Roberta Dessi, Edoardo Gallo, and Sanjeev Goyal, “Network Cognition”, TSE Working Paper, n. 12-362, October 2011, revised November 2012.