The emergence of inequality in social groups: Network structure and institutions affect the distribution of earnings in cooperation games

Abstract

From small communities to entire nations and society at large, inequality in wealth, social status, and power is one of the most pervasive and tenacious features of the social world. What causes inequality to emerge and persist? In this study, we investigate how the structure and rules of our interactions can increase inequality in social groups. Specifically, we look into the effects of four structural conditions—network structure, network fluidity, reputation tracking, and punishment institutions—on the distribution of earnings in network cooperation games. We analyze 33 experiments comprising 96 experimental conditions altogether. We find that there is more inequality in clustered networks compared to random networks, in fixed networks compared to randomly rewired and strategically updated networks, and in groups with punishment institutions compared to groups without. Secondary analyses suggest that the reasons inequality emerges under these conditions may have to do with the fact that fixed networks allow exploitation of the poor by the wealthy and clustered networks foster segregation between the poor and the wealthy, while the burden of costly punishment falls onto the poor, leaving them poorer. Surprisingly, we do not find evidence that inequality is affected by reputation in a systematic way but this could be because reputation needs to play out in a particular network environment in order to have an effect. Overall, our findings suggest possible strategies and interventions to decrease inequality and mitigate its negative impact, particularly in the context of mid- and large-sized organizations and online communities.

Cooperation dynamics in networked geometric Brownian motion

“…As a takeaway, we conclude that inequality may arise as a result of the interwoven relationship between complex networks and cooperative dynamics in fluctuating environments. While it is known that certain network topologies promote inequality [24,43], the effect of cooperative behavior in structured populations is still to be determined [44][45][46]. As such, our investigations aim at providing deeper understanding on the nature of the relationship between these two occurrences.…”

The effects of reputation on inequality in network cooperation games

“…One prior study that uses data from nine network cooperation experiments to investigate the effects of reputational information on the dispersion of final payoffs reports statistically significant effects in both the positive and negative directions, as well as near-zero effects [ 27 ]. Here, I extend this work in a couple of ways.…”

Sending the elevator back down: a mutual constitution between vertical and horizontal inequality

“…Thereby, authors have studied elements such as wealth accumulation and centralisation (Fuchs and Thurner 2014) and cooperative behaviour (Fowler and Christakis 2010) as well as how these vary depending on whether or not inequality is visible (Nishi and Christakis 2015). Another example can be found in analysing cooperation games, where certain network structures foster segregation between individuals, particularly between poorer and wealthier individuals (Tsvetkova et al 2018). Generally, the relational approach to inequality emphasises that '(membership of or) access to powerful networks, groups, and institutions, and inequalities in wealth and other economic resources shape proximal social environments that influence how individuals express their internal states and motivations' but also how individuals 'move up or down in the social class hierarchy' (Kraus and Park 2017, p. 2).…”