Inequality and network structure☆
Highlights
► This paper studies how the structure of a social network constrains the level of inequality that can be sustained. ► If a group of players in a network can deviate only when they are directly connected, a key determinant is the size of the maximum independent set of the network. ► In bipartite networks, the size of the maximum independent set fully characterizes the maximum level of inequality that can be sustained. ► A partial characterization is provided for general networks.
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We thank Larry Blume, Gabrielle Demange, Bhaskar Dutta, Sanjeev Goyal, Matt Jackson, Brian Rogers, Jack Stecher, Dolf Talman, Jia Xie, various audiences at seminars and conferences, and two anonymous referees for helpful comments and suggestions. This work is supported by the Behavioral Sciences Program of the Santa Fe Institute, the National Science Foundation and the Russell Sage Foundation.