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Intergroup links and aggregate effort in the social-norm model
This paper studies a social-norm model in which agents choose effort in response to their own productivity and the efforts of their neighbours. We analyse how links between groups with different productivity levels affect equilibrium effort and derive the intergroup linking intensity that maximises aggregate effort. We work in a stylised two-group stochastic block setting that allows for a tractable characterisation of the effort-maximising intergroup linking probability. As is shown, adding links between the clusters of agents with different productivities can increase the aggregate effort but, at the same time, reduce social welfare. The analytical results are confirmed by simulation experiments demonstrating the influence of intergroup links on agents’ interaction.