The old-boy network and the young-gun effect

A model of an exclusive group or class whose membership is governed by pers onal contact and interaction is studied. Members of this old-buy network at tempt to shield themselves from transacting with opportunistic or incompete nt individuals by dealing only infrequently with unproven nonmembers. This injures the unproven but qualified agents not in the network. Moreover, bec ause recruitment of a new member creates a public good for network members, too little recruiting is performed in equilibrium.