Explaining Clustering in Social Networks: Towards an Evolutionary Theory of Cascading Benefits

Managerial and Decision Economics, Vol. 27, Nos. 2-3, pp. 173-87, 2006

21 Pages Posted: 24 Mar 2006 Last revised: 21 Oct 2007

See all articles by Sheen S. Levine

Sheen S. Levine

University of Texas at Dallas; Columbia University

Robert Kurzban

University of Pennsylvania - Department of Psychology

Abstract

Individual and organizational actors enter into a large number of relationships that include benefiting others without ensuring the equality of reciprocal benefits. We suggest that actors have evolved mechanisms that guide them in the choice of exchange partners, even without conscious calculation or bookkeeping of gain and loss. One such mechanism directs actors to membership in clusters, which are homogeneous groups of actors densely connected among themselves and only loosely connected to other groups. We suggest that clusters offer network externalities, which are not possible in sparse networks, thus conferring cascading benefits on the actors contained in those clusters. Using this logic, one can understand the omnipresence of clustering in social networks of individuals and firms. We review the benefits and challenges associated with clustering and use the logic of cascading benefits to derive empirical predictions.

[Winner of Citation of Excellence as one of the 50 most important articles published in business in 2006, following a review of 15,000 published papers by Emerald Management Reviews. We benefited from presentations at the Academy of Management (Honolulu), the American Sociological Association (Philadelphia), and the International Institute of Sociology (Stockholm)]

Keywords: Social Network, Cluster, Tie, Broker, Alliance, Evolution, Exchange

JEL Classification: A14, D62, M2, D2, D85, L14, Z13

Suggested Citation

Levine, Sheen S. and Kurzban, Robert, Explaining Clustering in Social Networks: Towards an Evolutionary Theory of Cascading Benefits. Managerial and Decision Economics, Vol. 27, Nos. 2-3, pp. 173-87, 2006. Available at SSRN: https://ssrn.com/abstract=890232

Sheen S. Levine (Contact Author)

University of Texas at Dallas ( email )

2601 North Floyd Road
Richardson, TX 75083
United States

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States

Robert Kurzban

University of Pennsylvania - Department of Psychology ( email )

3720 Walnut Street
Philadelphia, PA 19104-6196
United States

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