Inequality and Network Formation Games

Abstract This article addresses the matter of inequality in network formation games. We employ a quantity that we are calling the Nash Inequality Ratio (NIR), defined as the maximal ratio between the highest and lowest costs incurred to individual agents in a Nash equilibrium strategy, to characterize the extent to which inequality is possible in equilibrium. We give tight upper bounds on the NIR for the network formation games of Fabrikant et al. [14] and Ehsani et al. [13]. With respect to the relationship between equality and social efficiency, we show that, contrary to common expectations, efficiency does not necessarily come at the expense of increased inequality.