Cooperating on Networks: Inequality and Social Structure

Speaker:  Dr Manuel Staab

Affiliation: The University of Queensland

Location: Level 6 Boardroom (629), Colin Clark Building (#39), UQ St Lucia Campus

Zoom: https://uqz.zoom.us/j/82603079317

Abstract: We analyse how inequality in endowments and social structure jointly affect individuals’ ability to cooperate. Individuals repeatedly invest in a local public good (“cooperation”) in an environment that is described by a distribution of endowments and a network of beneficiaries. We measure the cooperativeness of an environment by the minimum discount factors needed to sustain (any) cooperation in equilibrium. We characterise the endowment distribution that maximises cooperativeness for any given network and the corresponding minimum discount factors. We show that if an environment maximises cooperativeness (over all income distributions and networks of a certain size), then the network is highly hierarchical and can be described by a nested split graph. We further show that this is the same class of graphs that maximises welfare for any given discount factor, and yet, the most cooperative graph need not be equal to the most efficient.