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Cooperation and Collective Enforcement in Networked Societies

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  • David Miller

    (UCSD)

  • Nageeb Ali

    (UCSD)

Abstract

We endogenize social network formation and collective enforcement using a model in which players interact bilaterally and repeatedly along costly links. Cooperation is supported by the threat of collective punishments that spread through the network. Optimal networks are attainable in equilibrium. When the society is homogeneous, the optimal network consists of many separate cliques. Introducing heterogeneous match quality gives rise to more realistic ”small worlds” networks, with connectedness, small distances, and high clustering.

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Bibliographic Info

Paper provided by Society for Economic Dynamics in its series 2008 Meeting Papers with number 970.

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Date of creation: 2008
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Handle: RePEc:red:sed008:970

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Cited by:
  1. Itay P. Fainmesser & David A. Goldberg, 2011. "Bilateral and Community Enforcement in a Networked Market with Simple Strategies," Working Papers 2011-2, Brown University, Department of Economics.
  2. Yossi Feinberg & Willemien Kets, 2012. "Ranking Friends," Discussion Papers 1557, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  3. Spagnolo, Giancarlo & Lippert, Steffen, 2004. "Networks of Relations," Working Paper Series in Economics and Finance 570, Stockholm School of Economics, revised 03 May 2005.
  4. Francesco Nava & Michele Piccione, 2011. "Efficiency in Repeated Two-Action Games with Local Monitoring," STICERD - Theoretical Economics Paper Series /2012/560, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  5. Itay P. Fainmesser, 2012. "Community Structure and Market Outcomes: A Repeated Games-in-Networks Approach," American Economic Journal: Microeconomics, American Economic Association, vol. 4(1), pages 32-69, February.
  6. Nava, Francesco & Piccione, Michele, 2014. "Efficiency in repeated games with local interaction and uncertain local monitoring," Theoretical Economics, Econometric Society, vol. 9(1), January.
  7. Felipe Balmaceda & Juan Esconar, 2013. "Trust in Cohesive Communities," Documentos de Trabajo 295, Centro de Economía Aplicada, Universidad de Chile.

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