Spring 2010 Seminar Series

DATE: April 8th
LOCATION: E51-376
TIME: 4:15pm
Reception immediately following in the ORC Conference Room, E40-106

SPEAKER:
Garud Iyengar

TITLE
Inequality and Network Structure

ABSTRACT
In this talk we will explore the manner in which the structure of a social network constrains the level of inequality that can be sustained in the network. We assume that any distribution of value across the network must be stable with respect to coalitional deviations, and that a set of players (nodes) form a deviating coalition only if the set is a clique in the network.

 

We characterize the set of extreme income distributions when only cliques of size 2 or 3 are allowed to deviate. We obtain a complete ordering for networks where only edges are allowed to deviate and show that networks with larger maximum independent sets can sustain greater levels of inequality. We show that such networks have a unique stable payoff distribution that is maximally unequal in that it does not Lorenz dominate any other stable distribution. The intuition behind this result is that networks with larger maximum independent sets are more sparse and hence offer fewer opportunities for coalition formation. We also demonstrate that standard centrality measures do not consistently predict inequality.