Money and Social Exclusion in Networks

Maria Bigoni, Gabriele Camera and Edoardo Gallo

No 20481, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Globalization offers unparalleled opportunities to expand welfare through cooperation across large networks of unrelated individuals. Social exclusion – permanent or temporary – and monetary exchange are institutions that in theory can incentivize cooperation. In an experiment, we evaluate their relative performance and interaction in anonymous networks of different sizes. Permanent social exclusion (ostracism) reduces long-run economic potential by leading to sparse networks. Monetary exchange and temporary social exclusion perform similarly well in small networks. In large networks, however, monetary exchange is the only institution that promotes full cooperation by crowding out ostracism and keeping the network complete. An insight is that monetary systems outperform social exclusion mechanisms in promoting cooperation in globalized social and economic networks.

Keywords: Social; exclusion (search for similar items in EconPapers)
JEL-codes: C73 C92 D85 E40 (search for similar items in EconPapers)
Date: 2025-07
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