Inequality and Network Structure

Willimein Kets  

Wednesdays@NICO Seminar, Noon, February 22 2012, Chambers Hall, Lower Level

Prof. Willemien Kets, Northwestern University

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.

Biography

Willemien Kets joined the MEDS department at the Kellogg School of Management in 2011. Prior to joining MEDS, she was an Omidyar postdoctoral fellow at the Santa Fe Institute and a visiting scholar at Stanford University. She received her PhD in economics from Tilburg University (Netherlands). Her general research interests are in game theory and microeconomic theory, in particular the modeling of boundedly rational decision makers. She is also interested in the question how social structure affects economic outcomes. Additional Information can be found on her website http://www.kellogg.northwestern.edu/Faculty/Directory/Kets_Willemien.aspx