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Altruism in Networks

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  • Renaud Bourlès
  • Yann Bramoullé
  • Eduardo Perez‐Richet

Abstract

We provide the first analysis of altruism in networks. Agents are embedded in a fixed network and care about the well‐being of their network neighbors. Depending on incomes, they may provide financial support to their poorer friends. We study the Nash equilibria of the resulting game of transfers. We show that equilibria maximize a concave potential function. We establish existence, uniqueness of equilibrium consumption, and generic uniqueness of equilibrium transfers. We characterize the geometry of the network of transfers and highlight the key role played by transfer intermediaries. We then study comparative statics. A positive income shock to an individual benefits all. For small changes in incomes, agents in a component of the network of transfers act as if they were organized in an income‐pooling community. A decrease in income inequality or expansion of the altruism network may increase consumption inequality.

Suggested Citation

  • Renaud Bourlès & Yann Bramoullé & Eduardo Perez‐Richet, 2017. "Altruism in Networks," Econometrica, Econometric Society, vol. 85, pages 675-689, March.
  • Handle: RePEc:wly:emetrp:v:85:y:2017:i::p:675-689
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    1. repec:spr:jogath:v:47:y:2018:i:4:d:10.1007_s00182-018-0616-z is not listed on IDEAS
    2. Genicot, Garance, 2016. "Two-sided altruism and signaling," Economics Letters, Elsevier, vol. 145(C), pages 92-97.
    3. Dufwenberg, Martin & Patel, Amrish, 2017. "Reciprocity networks and the participation problem," Games and Economic Behavior, Elsevier, vol. 101(C), pages 260-272.
    4. Ingela Alger & Jörgen W. Weibull, 2017. "Strategic Behavior of Moralists and Altruists," Games, MDPI, Open Access Journal, vol. 8(3), pages 1-21, September.
    5. Victorien Barbet & Renaud Bourlès & Juliette Rouchier, 2017. "Informal Risk-Sharing Cooperatives: The Effect of Learning and Other-Regarding Preferences," AMSE Working Papers 1706, Aix-Marseille School of Economics, Marseille, France.
    6. Bulat Sanditov & Saurabh Arora, 2015. "Social network and private provision of public goods," SPRU Working Paper Series 2015-35, SPRU - Science Policy Research Unit, University of Sussex Business School.
    7. Bayer, Péter & Herings, P. Jean-Jacques & Peeters, Ronald & Thuijsman, Frank, 2017. "Adaptive Learning in Weighted Network Games," Research Memorandum 025, Maastricht University, Graduate School of Business and Economics (GSBE).
    8. Lionel Richefort, 2017. "Warm-Glow Giving in Networks with Multiple Public Goods," Working Papers 2017.32, Fondazione Eni Enrico Mattei.
    9. Courty, Pascal & Engineer, Merwan, 2017. "A Pure Hedonic Theory of Utility and Status: Unhappy but Efficient Invidious Comparisons," CEPR Discussion Papers 12478, C.E.P.R. Discussion Papers.

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