Division Rules, Network Formation, and the Evolution of Wealth
AbstractWe start with an initial wealth distribution. Each agent may establish at most one link with any agent in each period, yielding a surplus that agents split according to a uniform division rule. Wealth evolves by adding the payoffs to current wealth. Many long-run wealth distributions can arise, depending on the division rule and initial wealth distribution. The richest agent may remain richest or the poorest may become rich. Examing several division rules, we find that two factors determine the long-run wealth distribution: the size of the gain from a link, and the incentive to link to rich or poor.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Florida International University, Department of Economics in its series Working Papers with number 0507.
Length: 18 pages
Date of creation: Jun 2005
Date of revision:
Network formation; long-run wealth distribution;
Find related papers by JEL classification:
- D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
- D30 - Microeconomics - - Distribution - - - General
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Piccione, Michele & Rubinstein, Ariel, 2004. "The curse of wealth and power," Journal of Economic Theory, Elsevier, vol. 117(1), pages 119-123, July.
- Jackson, Matthew O. & Wolinsky, Asher, 1996.
"A Strategic Model of Social and Economic Networks,"
Journal of Economic Theory,
Elsevier, vol. 71(1), pages 44-74, October.
- Matthew O. Jackson & Asher Wolinsky, 1994. "A Strategic Model of Social and Economic Networks," Discussion Papers 1098, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Matthew O. Jackson & Asher Wolinsky, 1995. "A Strategic Model of Social and Economic Networks," Discussion Papers 1098R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sheng Guo).
If references are entirely missing, you can add them using this form.