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The Role of heterogeneity in group cooperation

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Treballs Finals del Màster d'Economia, Facultat d'Economia i Empresa, Universitat de Barcelona, Curs: 2020-2021, Tutor: Sergio Lozano Pérez

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Maintaining cooperation in large societies has been a challenging puzzle to economists for decades. Some of the concerning problems our society is facing nowadays like global warming or air pollution stem from the existence of weak local and global cooperation. New policies to promote cooperation involve social mechanisms to reinforce the behaviours needed to extend the public goods. These mechanisms locally address a wide variety of externality problems. However, the increasingly complex interactions in society pose a new challenge. This work aims at contributing to address such a challenge by exploring the effect of peer pressure over individual decisions in social networks. Specifically, based on previous models, we analyse the role played by degree heterogeneity (i.e. diversity of individuals’ number of peers) on PGG scenarios with peer-pressure. Those considerations emphasize how network position causes sensitiveness in the capacity of decision of the agents. Specifically, pressure cost unequally harms the agents in the network, negatively affecting the highly connected ones. This gap in behaviour between highly connected agents and low-connected agents do not favour the model cohesiveness. Our results suggest that heterogeneous connectivity must be considered when designing efficient and egalitarian policy tools to solve problems of externalities. These findings encourage future structural considerations in PGG with peer-pressure.

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The Role of heterogeneity in group cooperation