Impact of Social Network Structure on Social Welfare and Inequality

In this chapter, how the structure of a network can affect the social welfare and inequality (measured by the Gini coefficient) are investigated based on a graphical game model which is referred to as the Networked Resource Game (NRG). For the network structure, the Erdos-Renyi model, the preferential attachment model, and several other network structure models are implemented and compared to study how these models can effect the game dynamics. We also propose an algorithm for finding the bilateral coalition-proof equilibria because Nash equilibria do not lead to reasonable outcomes in this case. In economics, increasing inequalities and poverty can be sometimes interpreted as a circular cumulative causations, such positive feedback is also considered by us and a modified version of the NRG by considering the positive feedback (p-NRG) is proposed. The influence of network structures in this new model is also discussed at the end of this chapter.