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Altruism in Networks

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  • Renaud Bourlès

    ()

  • Yann Bramoullé

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Abstract

We provide the first theoretical analysis of altruism in networks. Agents are embedded in a fixed, weighted network and care about their direct friends. Given some initial distribution of incomes, they may decide to support their poorer friends. We study the resulting non-cooperative transfer game. Our analysis highlights the importance of indirect gifts, where an agent gives to a friend because his friend himself has a friend in need. We uncover four main features of this interdependence. First, we show that there is a unique profile of incomes after transfers, for any network and any utility functions. Uniqueness in transfers holds on trees, but not on arbitrary networks. Second, there is no waste in transfers in equilibrium. In particular, transfers flow through indirect paths of highest altruistic strength. Third, a negative shock on one agent cannot benefit others and tends to affect socially closer agents first. In addition, an income redistribution that decreases inequality ex-ante can increase inequality ex-post. Fourth, altruistic networks decrease income inequality. In contrast, more altruistic or more homophilous networks can increase inequality.

Suggested Citation

  • Renaud Bourlès & Yann Bramoullé, 2013. "Altruism in Networks," Working Papers halshs-00881451, HAL.
  • Handle: RePEc:hal:wpaper:halshs-00881451
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00881451
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    References listed on IDEAS

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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Altruism in Networks
      by maximorossi in NEP-LTV blog on 2013-11-27 18:56:46

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    Cited by:

    1. Genicot, Garance, 2016. "Two-sided altruism and signaling," Economics Letters, Elsevier, vol. 145(C), pages 92-97.
    2. Dufwenberg, Martin & Patel, Amrish, 2017. "Reciprocity networks and the participation problem," Games and Economic Behavior, Elsevier, vol. 101(C), pages 260-272.
    3. Ingela Alger & Jörgen W. Weibull, 2017. "Strategic Behavior of Moralists and Altruists," Games, MDPI, Open Access Journal, vol. 8(3), pages 1-21, September.
    4. 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.
    5. Bulat Sanditov & Saurabh Arora, 2015. "Social network and private provision of public goods," SPRU Working Paper Series 2015-35, SPRU - Science and Technology Policy Research, University of Sussex.
    6. 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).
    7. Lionel Richefort, 2017. "Warm-Glow Giving in Networks with Multiple Public Goods," Working Papers 2017.32, Fondazione Eni Enrico Mattei.

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    Keywords

    private transfers; social networks; altruism; income redistribution; income inequality;

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