Formation of Social Class: A Network Theory Approach

Abstract

This paper studies the underlying incentives of social class formation. I use the network model of favor exchange developed in Jackson et al. (2012), and extend it to more generalized case where each agent has their own capacity of value, which they can deliver through doing a favor. I verify that even in the heterogeneous value case, the network that is renegotiation-proof and robust to social contagion must take the form of social quilt suggested in Jackson et al. (2012), and the agents in robust network are not connected to those who have significantly lower value than his own value. This suggests that the social class is formed because of the peoples incentive to not to connected with other people with lower social status.