Identity, Exchange Networks, and the Emergence of Inequality

We examine how identity processes can give rise to inequality in power-balanced, negotiated exchange networks. We consider two forms of inequality: the inequality that arises between networks as a result of actors making suboptimal agreements, and the inequality that emerges between exchange partners within networks. Two experiments are conducted in which, within the exchange network, we vary the fairness identity (high vs. low) and the distribution of the verification process (verifying-verifying vs. non-verifying-non-verifying) in networks that are either four-person (square) (N=216) or three-person (triangle) (N=162). Results show that suboptimal agreements are more likely in four-person networks than in three-person networks, presumably as a result of the information gained from the exclusion process in the latter. Suboptimal agreements are also more likely in high fairness networks than low fairness networks. Further, while inequality in the distribution of resources between negotiation partners is lower in verifying dyads, this is particularly the case in three-person networks compared with four-person networks. At the dyadic level, we find that dyads consisting of individuals who consider themselves to be very fair are more likely to reach suboptimal agreements. This effect is stronger in four-person networks than in three-person networks, and when there is a discrepancy between how fair participants think they have been and how fair others think they have been. Dyadic inequality is lower in three-person networks than four-person networks as well as in mutually verifying dyads than non-verifying dyads. Aggregating the dyadic findings to the network level informs conclusions about how the identity composition of a network and the identity verification process, together with the network structure, shapes inequality in equal-power networks.