Abstract

We combine survey data on friendship networks and individual characteristics withnexperimental observations from dictator games. Dictator offers are primarily explained by social distance - giving follows a simple inverse distance law. While student demographics play a minor role in explaining offer amounts, individual heterogeneity is important for network formation. In particular, we detect significant homophilous behavior - students connect to others similar to them. Moreover, the network data reveal a strong preferencenfor cliques - students connect to those already close. The study is one of the first tonidentify network architecture with individual behavior in a strategic context.