Dessi, Roberta, Gallo, Edoardo and Goyal, Sanjeev (2011) Network Cognition. TSE Working Paper, n. 12-362

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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.

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  • Network Cognition. (deposited 15 Dec 2015 09:13)