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Altruism in Networks

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  • Renaud Bourlès

    ()
    (Ecole Centrale Marseille (Aix-Marseille School of Economics), CNRS & EHESS)

  • Yann Bramoullé

    (Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS)

Abstract

We provide the first theoretical analysis of altruism in networks. Agents are embedded in a fixed, weighted network and care about their direct friends. Given some initial distribution of incomes, they may decide to support their poorer friends. We study the resulting non-cooperative transfer game. Our analysis highlights the importance of indirect gifts, where an agent gives to a friend because his friend himself has a friend in need. We uncover four main features of this interdependence. First, we show that there is a unique profile of incomes after transfers, for any network and any utility functions. Uniqueness in transfers holds on trees, but not on arbitrary networks. Second, there is no waste in transfers in equilibrium. In particular, transfers flow through indirect paths of highest altruistic strength. Third, a negative shock on one agent cannot benefit others and tends to affect socially closer agents first. In addition, an income redistribution that decreases inequality ex-ante can increase inequality ex-post. Fourth, altruistic networks decrease income inequality. In contrast, more altruistic or more homophilous networks can increase inequality.

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File URL: http://www.amse-aixmarseille.fr/sites/default/files/_dt/2012/wp_2013_-_nr_56.pdf#overlay-context=fr/recherche/documents-de-travail/altruism-networks
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Bibliographic Info

Paper provided by Aix-Marseille School of Economics, Marseille, France in its series AMSE Working Papers with number 1356.

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Length: 29 pages
Date of creation: Nov 2013
Date of revision: Nov 2013
Handle: RePEc:aim:wpaimx:1356

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Web page: http://www.amse-aixmarseille.fr/en
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Keywords: Aix-Marseille University (Aix-Marseille School of Economics); CNRS & EHESS;

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  1. Andrew D. Foster & Mark R. Rosenzweig, 2001. "Imperfect Commitment, Altruism, And The Family: Evidence From Transfer Behavior In Low-Income Rural Areas," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 389-407, August.
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  3. Alger, Ingela & Weibull, Jörgen, 2007. "Family ties, incentives and development: a model of coerced altruism," Working Paper Series in Economics and Finance 681, Stockholm School of Economics.
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  6. Rosenblat, Tanya & Mobius, Markus, 2009. "Directed Altruism and Enforced Reciprocity in Social Networks," Staff General Research Papers 13025, Iowa State University, Department of Economics.
  7. Pierre Dubois & Bruno Jullien & Thierry Magnac, 2008. "Formal and informal risk sharing in LDCs: theory and empirical evidence," Working Papers 25314, Institut National de la Recherche Agronomique, France.
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    • Francis Bloch (GREQAM and Universite de la Mediterranee), Garance Genicot (Georgetown University, and Debraj Ray (New York University and Instituto de Analisis Economico (CSIC)), 2004. "Informal Insurance in Social Networks," Working Papers gueconwpa~04-04-16, Georgetown University, Department of Economics.
  15. Bernheim, B Douglas & Stark, Oded, 1988. "Altruism within the Family Reconsidered: Do Nice Guys Finish Last?," American Economic Review, American Economic Association, vol. 78(5), pages 1034-45, December.
  16. Arrondel, Luc & Masson, Andre, 2006. "Altruism, exchange or indirect reciprocity: what do the data on family transfers show?," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
  17. Jean Mercier, 1993. "Équilibre général de dons individuels," Revue économique, Presses de Sciences-Po, vol. 0(5), pages 925-950.
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  20. Townsend, R.M., 1991. "Risk and Insurance in Village India," University of Chicago - Economics Research Center 91-3, Chicago - Economics Research Center.
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  1. Altruism in Networks
    by maximorossi in NEP-LTV blog on 2013-11-27 12:56:46

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