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Money and Social Exclusion in Networks

Author

Listed:
  • Bigoni, M.
  • Camera, G.
  • Gallo, E.

Abstract

Globalization offers unparalleled opportunities to expand welfare through cooperation across large networks of unrelated individuals. Social exclusion – permanent or temporary – and monetary exchange are institutions that in theory can incentivize cooperation. In an experiment, we evaluate their relative performance and interaction in anonymous networks of different sizes. Permanent social exclusion (ostracism) reduces long-run economic potential by leading to sparse networks. Monetary exchange and temporary social exclusion perform similarly well in small networks. In large networks, however, monetary exchange is the only institution that promotes full cooperation by crowding out ostracism and keeping the network complete. An insight is that monetary systems outperform social exclusion mechanisms in promoting cooperation in globalized social and economic networks.

Suggested Citation

  • Bigoni, M. & Camera, G. & Gallo, E., 2025. "Money and Social Exclusion in Networks," Janeway Institute Working Papers 2519, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camjip:2519
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    File URL: https://www.janeway.econ.cam.ac.uk/working-paper-pdfs/jiwp2519.pdf
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    Keywords

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    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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