Jul 29, 2011 Filed in:
NewsNageeb Ali and I have been awarded a three-year grant from the National Science Foundation Economics Program, entitled “Enforcing Cooperation in Networked Societies.” Stay tuned for our first working paper soon, and lots of great projects to follow after that.
Abstract excerpt: The foundation of economic activity and growth is in the ability of individuals to trust and trade with each other over time. Throughout human history, much of economic activity occurs in realms where formal legal institutions are unwilling or unsuited to enforce cooperative behavior. A growing literature on informal enforcement suggests that the networked pattern of social relationships plays a key role in supporting cooperation: as information about past behavior diffuses through the network, an individual who deviates in a partnership is punished not only by her partner but also by those who come to learn about it. Our research program studies how communities enforce cooperation through their social networks.PermalinkTags: Social Networks, Cooperation, Community enforcement
Feb 01, 2010 Filed in:
Work in progressWith Nageeb Ali
Abstract: We endogenize social network formation and collective enforcement using a model in which players interact bilaterally and repeatedly along costly links. Players observe only their own partners' actions, so collective punishments that support cooperation must spread endogenously through the network, as a contagion. Our model features asynchronous interaction, variable stakes in each relationship, and transferable utilities. With these properties, for any network there exists a contagion equilibrium in which incentive constraints bind along the equilibrium path. Among symmetric networks, the optimal network topology in a large society features many identical, independent cliques. We conjecture that such a network is also Pareto optimal among all (symmetric and asymmetric) networks. Our results formalize the notion that when collective enforcement is decentralized, the level of social cooperation, or "social capital," is maximized in tight-knit, highly clustered groups.
Working paper coming soon
PermalinkTags: Repeated games, Social Networks, Community enforcement, Network Formation, Cooperation, Contagion, Small Worlds, Cliques
