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Inequality and network structure

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  • Kets, Willemien
  • Iyengar, Garud
  • Sethi, Rajiv
  • Bowles, Samuel

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.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:gamebe:v:73:y:2011:i:1:p:215-226
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Krishna Dasaratha, 2017. "Distributions of Centrality on Networks," Papers 1709.10402, arXiv.org, revised Jan 2018.
    2. Daniele Cassese & Paolo Pin, 2018. "Edgeworth trading on networks," Papers 1803.08836, arXiv.org.
    3. Vincent Iehlé, 2015. "The lattice structure of the S-Lorenz core," Theory and Decision, Springer, vol. 78(1), pages 141-151, January.
    4. Newton, Jonathan, 2012. "Coalitional stochastic stability," Games and Economic Behavior, Elsevier, vol. 75(2), pages 842-854.
    5. 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.
    6. 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.
    7. 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.

    More about this item

    Keywords

    Inequality Networks Cooperative games Lorenz dominance;

    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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