Inequality and Network Effects
Primary source consulted:
https://news.mit.edu/2020/inequality-across-networks-eaman-jahani-1112
A summary:
The source linked above delves into the world of inequality as it pertains to network effects. PhD candidate Eaman Jahani explores the intersection between sociology and computational studies by examining the way social networks can exacerbate inequality. He notes that, because networks play a crucial role in accessing resources like employment information, financial assistance and upward social mobility in general, network effects can end up worsening existing socioeconomic stratification. As part of his research, Jahani looks closely at the connections that exist between high-income people and low-income people. He found somewhat favorable outcomes for low-income people only when connections between the two group were more evenly distributed across the network.
Next, he decided to test network effects in a controlled manner via a game played by two different groups of players. The goal of the game is to locate a gold mine on a map and, once found, this will determine how much money players receive at the end of the game. Over several rounds of playing the game, researchers are able to observe the behavior of individual players in these two networks. Here’s one of the most important parts: sharing the location of the gold mine with others reduces the amount of your reward for that round of the game. However, doing so incentivizes other players to repay the favor in later rounds and share information with you regarding the gold mine’s location. This positive network effect in turn benefits the group overall because the information needed to locate the gold is freely shared. Jahani calls this a “mechanism for reciprocity.” He also ensured one group of players would be considered “high status” while the other would be “low status” to simulate real world socioeconomic divides. His research so far reveals that, among “low status” players, there is much less incentive for players to help one another because they aren’t sure if they will receive help in the future. Because others aren’t sharing in the “low status” group, access to the main resource in the game (the gold) is greatly reduced for everyone in the low status group. This reflects a negative network effect. It’s just the opposite in the “high status” group wherein players are far more likely to share with one another because their higher status means others are more likely to reciprocate. In this case, network effects only positively impact the wealthier, “high status” group of players.
How it’s relevant:
Jahani’s study directly relates to the INFO 2040 course material considering he’s studying the real-world (or as close to real-world as possible) impact of network effects. He’s applying the concept to an incredibly important social justice issue: wealth inequality. He’s exposing how network effects can negatively impact society by showing how it facilitates the unequal distribution/hoarding of resources.