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Altruism in Networks

Author

Listed:
  • Renaud Bourlès

    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

  • Yann Bramoullé

    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

  • Eduardo Perez-Richet

    (X-DEP-ECO - Département d'Économie de l'École Polytechnique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris, ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique)

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," Post-Print hal-01590007, HAL.
    • Handle: RePEc:hal:journl:hal-01590007
    DOI: 10.3982/ECTA13533
    Note: View the original document on HAL open archive server: https://amu.hal.science/hal-01590007v1
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