Santa Fe Institute
Inequality and Network Structure
We consider a setting where players on a network jointly generate some value. The degree of inequality in the distribution of the value that can be sustained is determined by the opportunities for players to secede from the network. Under the natural assumption that players can only form a coalition with those in their close proximity in the network, we show that the maximum degree of inequality that can be sustained is directly linked to the size of a maximum independent set of a network, a measure for the sparseness of the network. We also characterize the full set of stable allocations for a wide range of networks.