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Faculty of Economics


Choi, S., Goyal, S. and Moisan, F.

Brokerage and Intermediation Networks: An Experimental Study


Abstract: We study the determinants of intermediation networks through an examination of two pricing rules: criticality and betweenness. The theory makes sharp predictions: under criticality, stable networks involve interconnected cycles, under betweenness, stable networks contain a few hubs with most of the links. Under criticality, network distances grow but degree and payoff inequality remain modest as number of traders grows; under betweenness, network distances remain unchanged but degree and pay-off inequality explode as the number of traders grows. Our paper provides strong experimental support for these theoretical predictions.

JEL Codes: C92 D83 D85 Z13

Author links: Sanjeev Goyal  


Open Access Link:

Keynes Fund Project(s):
Experiments on Financial Networks (JHLB)  
Experiments on 'Networked Markets' (JHLR)