14th journées Louis-André Gérard-Varet

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Altruism in Networks
Yann Bramoullé, Renaud Bourlès

Last modified: 2015-05-14

Abstract


We provide the first analysis of altruism in networks. Agents are connected through a fixed, weighted network and care about the well-being of their network neighbors. Given some initial distribution of incomes, agents may provide financial support to their poorer friends. We characterize the Nash equilibria of this transfer game for general networks and utility functions. Our analysis highlights the importance of indirect gifts, where an agent gives to a friend because his friend himself has a friend in need. We uncover four main features of this interdependence. First despite a potentially large multiplicity in transfers, all Nash equilibria lead to the same consumption levels. Second, there is no waste in transfers in equilibrium and transfers flow through paths of highest altruistic strength. Third, equilibrium consumptions vary monotonically with incomes. And a redistribution that decreases income inequality can increase consumption inequality. Fourth, altruistic networks decrease inequality and the shape of the network has a first-order impact on inequality reduction.

Keywords


private transfers; altruism; social networks; income redistribution; inequality