A Theory of Multiplexity: Sustaining Cooperation with Multiple Relations

38 Pages Posted: 24 Mar 2021 Last revised: 10 May 2021

See all articles by Chen Cheng

Chen Cheng

Johns Hopkins University - Carey Business School

Wei Huang

Emory University - Department of Economics; National University of Singapore (NUS) - NUS Business School; IZA Institute of Labor Economics

Yiqing Xing

Johns Hopkins University - Carey Business School

Date Written: April 26, 2021

Abstract

People are embedded in multiple social relations. These relations are not isolated from each other. Do different networks overlap and why? We focus on the following question: When an agent has a new relation to add, would they choose to multiplex, i.e., to link with a friend or a stranger? The key tradeoff that we emphasize is the one between multiplexity and community enforcement. Multiplexity enhances cooperation because various relations serve as social collateral for each other, while linking to a stranger can utilize community enforcement, whose power relies more on the rest of the network structure. We find the following: (1) There is a strong tendency to multiplex, and the “multiplexity trap” can occur; that is, agents may keep adding relationships with friends, even when it is more efficient to link with a stranger. (2) Agents tend to multiplex when the existing network (a) has a low degree dispersion (i.e., all agents have similar numbers of friends) or (b) is positively assortative (agents are linked with those with a similar number of friends). We also find that agents tend to multiplex when the new relationship is more important. Using the Indian Village Survey data, we provide supportive evidence for our theoretical predictions.

Keywords: Multiplex, Networks, Cooperation, Network formation, Degree dispersion, Assortativity

JEL Classification: C73, D85, O17, Z13

Suggested Citation

Cheng, Chen and Huang, Wei and Xing, Yiqing, A Theory of Multiplexity: Sustaining Cooperation with Multiple Relations (April 26, 2021). Available at SSRN: https://ssrn.com/abstract=3811181 or http://dx.doi.org/10.2139/ssrn.3811181

Chen Cheng

Johns Hopkins University - Carey Business School ( email )

100 International Drive
Baltimore, MD 21202
United States

Wei Huang

Emory University - Department of Economics ( email )

1602 Fishburne Drive
Atlanta, GA 30322
United States

National University of Singapore (NUS) - NUS Business School ( email )

15 Kent Ridge Dr
Singapore, 129800
Singapore

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Yiqing Xing (Contact Author)

Johns Hopkins University - Carey Business School ( email )

100 International Drive
Baltimore, MD 21202
United States

HOME PAGE: http://yiqingxing.com

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