On the dynamics of social ties structures in groups

Economic behavior often takes place in small groups of people interacting with each other (like work teams and boards of directors, but also social networks and neighborhoods). Characteristic of such interaction is the development of (affective) interpersonal relationships, or social ties. The embeddedness of economic behavior in networks of social ties seems to have a profound impact on the outcome of economic processes. In this paper, we investigate experimentally the development of social ties structures through economic interaction in a public good environment. It turns out that complicated dynamics arise from individual differences in social value orientation and affective response patterns. Keywords: Social ties; Group dynamics; Public good experiment JEL classification: H41; C92 PsycINFO: 2910; 302