A model of network redistributive pressure

Abstract In this paper, we propose a network model to explain the implications of the pressure to share resources. Individuals use the network to establish social interactions that allow them to increase their income. They also use the network as a safety and to ask for assistance in case of need. The network is therefore a system characterized by social pressure to share and redistribute surplus of resources among members. The main result is that the potential redistributive pressure from other network members causes individuals to behave inefficiently. The number of social interactions used to employ workers displays a non-monotonic pattern with respect to the number of neighbors (degree): it increases for intermediate degree and decreases for high degree. Respect to a benchmark case without social pressure, individuals with few (many) network members interact more (less). Finally, we show that these predictions are consistent with the results obtained in a set of field experiments run in rural Tanzania.