Altruism Networks, Income Inequality, and Economic Relations

Yann Bramoullé and Rachel Kranton
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Rachel Kranton: Duke University [Durham]

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Abstract: What patterns of economic relations arise when people are altruistic rather than strategically self-interested? This paper introduces an altruism network into a simple model of choice among partners for economic activity. With concave utility, agents effectively become inequality averse towards friends and family. Rich agents preferentially choose to work with poor friends despite productivity losses. Hence, network inequality-the divergence in incomes within sets of friends and family-is key to how altruism shapes economic relations and output. Skill homophily also plays a role; preferential contracts and productivity losses decline when rich agents have poor friends with requisite skills.

Date: 2022-02-09
New Economics Papers: this item is included in nep-cwa, nep-net and nep-upt
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Working Paper: Altruism Networks, Income Inequality, and Economic Relations (2022)
Working Paper: Altruism Networks, Income Inequality, and Economic Relations (2022)
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