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Inequality and Network Structure

Author

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  • Iyengar, G.
  • Kets, W.

    (Tilburg University, Center For Economic Research)

  • Sethi, R.
  • Bowles, S.

Abstract

We explore the manner in which the structure of a social network constrains the level of inequality that can be sustained among its members, based on the following considerations: (i) any distribution of value must be stable with respect to coalitional deviations, and (ii) the network structure itself determines the coalitions that may form. We show that if players can jointly deviate only if they form a clique in the network, then the degree of inequality that can be sustained depends on the cardinality of the maximum independent set. For bipartite networks, the size of the maximum independent set fully characterizes the degree of inequality that can be sustained. This result extends partially to general networks and to the case in which a group of players can deviate jointly if they are all sufficiently close to each other in the network.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Iyengar, G. & Kets, W. & Sethi, R. & Bowles, S., 2008. "Inequality and Network Structure," Discussion Paper 2008-76, Tilburg University, Center for Economic Research.
  • Handle: RePEc:tiu:tiucen:c4036eb1-2637-4542-80f8-3fc8921156f4
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Dasaratha, Krishna, 2020. "Distributions of centrality on networks," Games and Economic Behavior, Elsevier, vol. 122(C), pages 1-27.
    2. Kets, Willemien & Iyengar, Garud & Sethi, Rajiv & Bowles, Samuel, 2011. "Inequality and network structure," Games and Economic Behavior, Elsevier, vol. 73(1), pages 215-226, September.
    3. Arsen Palestini & Giuseppe Pignataro, 2023. "Inequality assessment in a dynamic framework with heterogenous agents," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 40(2), pages 469-494, July.
    4. Daniele Cassese & Paolo Pin, 2018. "Decentralized Pure Exchange Processes on Networks," Papers 1803.08836, arXiv.org, revised Mar 2022.
    5. Matthew Elliott & Arun Chandrasekhar & Attila Ambrus, 2015. "Social Investments, Informal Risk Sharing, and Inequality," 2015 Meeting Papers 189, Society for Economic Dynamics.
    6. Attila Ambrus & Arun G. Chandrasekhar & Matt Elliott, 2014. "Social Investments, Informal Risk Sharing, and Inequality," NBER Working Papers 20669, National Bureau of Economic Research, Inc.
    7. Thành Nguyen, 2015. "Coalitional Bargaining in Networks," Operations Research, INFORMS, vol. 63(3), pages 501-511, June.
    8. Vincent Iehlé, 2015. "The lattice structure of the S-Lorenz core," Theory and Decision, Springer, vol. 78(1), pages 141-151, January.
    9. Björn Toelstede, 2020. "Social hierarchies in democracies and authoritarianism: The balance between power asymmetries and principal-agent chains," Rationality and Society, , vol. 32(3), pages 334-366, August.
    10. Newton, Jonathan, 2012. "Coalitional stochastic stability," Games and Economic Behavior, Elsevier, vol. 75(2), pages 842-854.
    11. Gräbner, Claudius & Heinrich, Torsten & Kudic, Muhamed, 2016. "Structuration processes in complex dynamic systems - an overview and reassessment," MPRA Paper 69095, University Library of Munich, Germany.
    12. Palestini, Arsen & Pignataro, Giuseppe, 2016. "A graph-based approach to inequality assessment," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 455(C), pages 65-78.
    13. Marianna Belloc & Samuel Bowles, 2013. "The Persistence of Inferior Cultural-Institutional Conventions," American Economic Review, American Economic Association, vol. 103(3), pages 93-98, May.
    14. Qi Feng & Chengzhang Li & Mengshi Lu & J. George Shanthikumar, 2022. "Implementing Environmental and Social Responsibility Programs in Supply Networks Through Multiunit Bilateral Negotiation," Management Science, INFORMS, vol. 68(4), pages 2579-2599, April.
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    16. Riccardo Pansini & Marco Campennì & Lei Shi, 2020. "Segregating socioeconomic classes leads to an unequal redistribution of wealth," Palgrave Communications, Palgrave Macmillan, vol. 6(1), pages 1-10, December.

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    More about this item

    Keywords

    inequality; networks; coalitional deviations; power; centrality;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D30 - Microeconomics - - Distribution - - - General
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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