IDEAS home Printed from https://ideas.repec.org/a/eee/gamebe/v73y2011i1p215-226.html
   My bibliography  Save this article

Inequality and network structure

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0899825611000029
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Bloch, Francis & Genicot, Garance & Ray, Debraj, 2008. "Informal insurance in social networks," Journal of Economic Theory, Elsevier, vol. 143(1), pages 36-58, November.
    2. Dutta, Bhaskar & Ray, Debraj, 1989. "A Concept of Egalitarianism under Participation Constraints," Econometrica, Econometric Society, vol. 57(3), pages 615-635, May.
    3. 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.
    4. Jackson, Matthew O. & Wolinsky, Asher, 1996. "A Strategic Model of Social and Economic Networks," Journal of Economic Theory, Elsevier, vol. 71(1), pages 44-74, October.
    5. Kalai, Ehud & Postlewaite, Andrew & Roberts, John, 1978. "Barriers to trade and disadvantageous middlemen: Nonmonotonicity of the core," Journal of Economic Theory, Elsevier, vol. 19(1), pages 200-209, October.
    6. Hojman, Daniel A. & Szeidl, Adam, 2008. "Core and periphery in networks," Journal of Economic Theory, Elsevier, vol. 139(1), pages 295-309, March.
    7. Roger B. Myerson, 1977. "Graphs and Cooperation in Games," Mathematics of Operations Research, INFORMS, vol. 2(3), pages 225-229, August.
    8. Gabrielle Demange, 2004. "On Group Stability in Hierarchies and Networks," Journal of Political Economy, University of Chicago Press, vol. 112(4), pages 754-778, August.
    9. Kaneko, Mamoru & Wooders, Myrna Holtz, 1982. "Cores of partitioning games," Mathematical Social Sciences, Elsevier, vol. 3(4), pages 313-327, December.
    10. van den Nouweland, Anne & Borm, Peter, 1991. "On the Convexity of Communication Games," International Journal of Game Theory, Springer;Game Theory Society, vol. 19(4), pages 421-430.
    11. Bramoulle, Yann & Kranton, Rachel, 2007. "Public goods in networks," Journal of Economic Theory, Elsevier, vol. 135(1), pages 478-494, July.
    12. Goyal, Sanjeev & Vega-Redondo, Fernando, 2007. "Structural holes in social networks," Journal of Economic Theory, Elsevier, vol. 137(1), pages 460-492, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.
    2. Daniele Cassese & Paolo Pin, 2018. "Decentralized Pure Exchange Processes on Networks," Papers 1803.08836, arXiv.org, revised Mar 2022.
    3. Attila Ambrus & Arun G. Chandrasekhar & Matt Elliott, 2014. "Social Investments, Informal Risk Sharing, and Inequality," NBER Working Papers 20669, National Bureau of Economic Research, Inc.
    4. Thành Nguyen, 2015. "Coalitional Bargaining in Networks," Operations Research, INFORMS, vol. 63(3), pages 501-511, June.
    5. Vincent Iehlé, 2015. "The lattice structure of the S-Lorenz core," Theory and Decision, Springer, vol. 78(1), pages 141-151, January.
    6. Newton, Jonathan, 2012. "Coalitional stochastic stability," Games and Economic Behavior, Elsevier, vol. 75(2), pages 842-854.
    7. 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.
    8. 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.
    9. Dasaratha, Krishna, 2020. "Distributions of centrality on networks," Games and Economic Behavior, Elsevier, vol. 122(C), pages 1-27.
    10. Arsen Palestini & Giuseppe Pignataro, 2023. "Inequality assessment in a dynamic framework with heterogenous agents," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 40(2), pages 469-494, July.
    11. Matthew Elliott & Arun Chandrasekhar & Attila Ambrus, 2015. "Social Investments, Informal Risk Sharing, and Inequality," 2015 Meeting Papers 189, Society for Economic Dynamics.
    12. Björn Toelstede, 2020. "Social hierarchies in democracies and authoritarianism: The balance between power asymmetries and principal-agent chains," Rationality and Society, , vol. 32(3), pages 334-366, August.
    13. 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.
    14. Qi Feng & Chengzhang Li & Mengshi Lu & J. George Shanthikumar, 2022. "Implementing Environmental and Social Responsibility Programs in Supply Networks Through Multiunit Bilateral Negotiation," Management Science, INFORMS, vol. 68(4), pages 2579-2599, April.
    15. Matthew O. Jackson, 2020. "A typology of social capital and associated network measures," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 54(2), pages 311-336, March.
    16. Riccardo Pansini & Marco Campennì & Lei Shi, 2020. "Segregating socioeconomic classes leads to an unequal redistribution of wealth," Palgrave Communications, Palgrave Macmillan, vol. 6(1), pages 1-10, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Matthew Elliott & Arun Chandrasekhar & Attila Ambrus, 2015. "Social Investments, Informal Risk Sharing, and Inequality," 2015 Meeting Papers 189, Society for Economic Dynamics.
    2. Attila Ambrus & Arun G. Chandrasekhar & Matt Elliott, 2014. "Social Investments, Informal Risk Sharing, and Inequality," NBER Working Papers 20669, National Bureau of Economic Research, Inc.
    3. René Brink, 2012. "On hierarchies and communication," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 39(4), pages 721-735, October.
    4. Herings, P. Jean-Jacques & van der Laan, Gerard & Talman, Dolf, 2007. "The socially stable core in structured transferable utility games," Games and Economic Behavior, Elsevier, vol. 59(1), pages 85-104, April.
    5. Sanjeev Goyal, 2015. "Networks in Economics: A Perspective on the Literature," Cambridge Working Papers in Economics 1548, Faculty of Economics, University of Cambridge.
    6. Goyal, S., 2018. "Heterogeneity and Networks," Cambridge Working Papers in Economics 1812, Faculty of Economics, University of Cambridge.
    7. Michel Grabisch, 2013. "The core of games on ordered structures and graphs," Annals of Operations Research, Springer, vol. 204(1), pages 33-64, April.
    8. Thành Nguyen, 2015. "Coalitional Bargaining in Networks," Operations Research, INFORMS, vol. 63(3), pages 501-511, June.
    9. Gabrielle Demange, 2004. "On Group Stability in Hierarchies and Networks," Journal of Political Economy, University of Chicago Press, vol. 112(4), pages 754-778, August.
    10. Jackson, Matthew O. & Zenou, Yves, 2015. "Games on Networks," Handbook of Game Theory with Economic Applications,, Elsevier.
    11. Goyal, S., 2016. "Networks and Markets," Cambridge Working Papers in Economics 1652, Faculty of Economics, University of Cambridge.
    12. Sergio Currarini, 2003. "On the Stability of Hierarchies in Games with Externalities," Working Papers 2003.19, Fondazione Eni Enrico Mattei.
    13. Sumit Joshi & Ahmed Saber Mahmud, 2017. "Unilateral and Multilateral Sanctions: A Network Approach," Working Papers 2017-28, The George Washington University, Institute for International Economic Policy.
    14. Olaizola Ortega, María Norma & Valenciano Llovera, Federico, 2016. "A Marginalist Model of Network Formation," IKERLANAK info:eu-repo/grantAgreeme, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
    15. Joshi, Sumit & Mahmud, Ahmed Saber, 2018. "Unilateral and multilateral sanctions: A network approach," Journal of Economic Behavior & Organization, Elsevier, vol. 145(C), pages 52-65.
    16. Choi, S. & Goyal, G. & Moisan, F., 2020. "Large Scale Experiments on Networks: A New Platform with Applications," Cambridge Working Papers in Economics 2063, Faculty of Economics, University of Cambridge.
    17. Isabel Melguizo, 2023. "Group representation concerns and network formation," Bulletin of Economic Research, Wiley Blackwell, vol. 75(1), pages 151-179, January.
    18. E. Algaba & J.M. Bilbao & J.J. López, 2001. "A unified approach to restricted games," Theory and Decision, Springer, vol. 50(4), pages 333-345, June.
    19. Swapnil Dhamal & Y. Narahari, 2015. "Formation of Stable Strategic Networks with Desired Topologies," Studies in Microeconomics, , vol. 3(2), pages 158-213, December.
    20. Page Jr., Frank H. & Wooders, Myrna, 2009. "Strategic basins of attraction, the path dominance core, and network formation games," Games and Economic Behavior, Elsevier, vol. 66(1), pages 462-487, 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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:gamebe:v:73:y:2011:i:1:p:215-226. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622836 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.