Abstract
We study the determinants of intermediation networks and brokerage rents through an examination of two pricing rules: criticality and betweenness. Under criticality, stable networks involve one or more interconnected cycles; under betweenness, stable networks contain one or more hubs with a disproportionate share of links. Under criticality, distances grow but degree and payoff inequality remain modest as group size grows; under betweenness, distances remain unchanged but degree and payoff inequality explode as group size grows. Our experiment shows that subjects create networks that are in line with the predictions of the theory.