nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2005‒07‒03
eleven papers chosen by
Fabio Sabatini
Universitá degli Studi di Roma, La Sapienza

  1. Driving Forces Behind Informal Sanctions By Armin Falk; Ernst Fehr; Urs Fischbacher
  2. The Economics of Altruistic Punishment and the Demise of Cooperation By Martijn Egas; Arno Riedl
  3. The Neuroeconomics of Mind Reading and Empathy By Tania Singer; Ernst Fehr
  4. Neuroeconomic Foundations of Trust and Social Preferences By Ernst Fehr; Urs Fischbacher; University of Zurich
  5. Social capital as social networks. A new framework for measurement By Fabio Sabatini
  6. Social Capital, Public Spending and the Quality of Economic Development By Fabio Sabatini
  7. Single Mothers, Social Capital, and Work-Family Conflict By Teresa Ciabattari
  8. Law and Behaviours in Social Dilemmas: Testing the Effect of Obligations on Cooperation By Roberto Galbiati; Pietro Vertova
  9. Examining the Role of Fairness in High Stakes Allocation Decisions By Todd L. Cherry; John A. List
  10. Encouraging a Coalition Formation By Michael Maschler
  11. Linking safety nets, social protection, and poverty reduction By Adato, Michelle; Ahmed, Akhter U.; Lund, Francie

  1. By: Armin Falk (IZA Bonn and University of Bonn); Ernst Fehr (University of Zurich and IZA Bonn); Urs Fischbacher (University of Zurich)
    Abstract: This paper investigates the driving forces behind informal sanctions in cooperation games and the extent to which theories of fairness and reciprocity capture these forces. We find that cooperators’ punishment is almost exclusively targeted towards the defectors but the latter also impose a considerable amount of spiteful punishment on the cooperators. However, spiteful punishment vanishes if the punishers can no longer affect the payoff differences between themselves and the punished individual, whereas the cooperators even increase the resources devoted to punishment in this case. Our data also discriminate between different fairness principles. Fairness theories that are based on the assumption that players compare their own payoff to the group’s average or the group’s total payoff cannot explain the fact that cooperators target their punishment at the defectors. Fairness theories assuming that players aim to minimize payoff inequalities cannot explain the fact that cooperators punish defectors even if payoff inequalities cannot be reduced. Therefore, retaliation, i.e., the desire to harm those who committed unfair acts, seems to be the most important motive behind fairnessdriven informal sanctions.
    Keywords: sanctioning, cooperation, social norm, reciprocity, fairness, spitefulness
    JEL: A13 D63 D23 C92 K42
    Date: 2005–06
  2. By: Martijn Egas (IBED, University of Amsterdam); Arno Riedl (CREED, University of Amsterdam, Tinbergen Institute and IZA Bonn)
    Abstract: Explaining the evolution and maintenance of cooperation among unrelated individuals is one of the fundamental problems in biology and the social sciences. Recent experimental evidence suggests that altruistic punishment is an important mechanism to maintain cooperation among humans. In this paper we explore the boundary conditions for altruistic punishment to maintain cooperation by systematically varying the cost and impact of punishment, using a subject pool which extends beyond the standard student population. We find that the economics of altruistic punishment lead to the demise of cooperation when punishment is relatively expensive and/or has low impact. Our results indicate that the 'decision to punish' comes from an amalgam of emotional response and cognitive costbenefit analysis. Additionally, earnings are lowest when punishment promotes cooperation, suggesting that the scope for altruistic punishment as a means to maintain cooperation is limited.
    Keywords: altruistic punishment, collective action, public goods, internet experiment
    JEL: C72 C91 C93 D70 H41
    Date: 2005–06
  3. By: Tania Singer (Functional Imaging Laboratory,University College London); Ernst Fehr (University of Zurich and IZA Bonn)
    Abstract: The most fundamental solution concepts in Game Theory - Nash equilibrium, backward induction, and iterated elimination of dominated strategies - are based on the assumption that people are capable of predicting others' actions. These concepts require people to be able to view the game from the other players’ perspectives, i.e. to understand others’ motives and beliefs. Economists still know little about what enables people to put themselves into others’ shoes and how this ability interacts with their own preferences and beliefs. Social neuroscience provides insights into the neural mechanism underlying our capacity to represent others' intentions, beliefs, and desires, referred to as "Theory of Mind" or "mentalizing", and the capacity to share the feelings of others, referred to as "empathy". We summarize the major findings about the neural basis of mentalizing and empathizing and discuss some implications for economics.
    Keywords: neuroeconomics, mind reading, empathy
    JEL: A10 C90
    Date: 2005–06
  4. By: Ernst Fehr (University of Zurich and IZA Bonn); Urs Fischbacher (University of Zurich); University of Zurich (University of Zurich)
    Abstract: This paper discusses recent neuroeconomic evidence related to other-regarding behaviors and the decision to trust in other people’s other-regarding behavior. This evidence supports the view that people derive nonpecuniary utility (i) from mutual cooperation in social dilemma (SD) games and (ii) from punishing unfair behavior. Thus, mutual cooperation and the punishment of free riders in SD games is not irrational, but better understood as rational behavior of people with corresponding social preferences. We also report the results of a recent study that examines the impact of the neuropeptide Oxytocin (OT) on trusting and trustworthy behavior in a sequential SD. Animal studies have identified Oxytocin as a hormone that induces prosocial approach behavior, suggesting that it may also affect prosocial behavior in humans. Indeed, the study shows that subjects given Oxytocin exhibit much more trusting behavior, suggesting that OT has a direct impact on certain aspects of subjects’ social preferences. Interestingly, however, although Oxytocin affects trusting behavior, it has no effect on subjects’ trustworthiness.
    Keywords: social preferences, foundations of trust, neuroeconomic
    JEL: A13 C90
    Date: 2005–06
  5. By: Fabio Sabatini (University of Rome La Sapienza)
    Abstract: The contribution of this paper to the social capital literature is twofold. Drawing on the Italian data, it firstly provides a new framework for measurement, allowing to build indicators for five different components of the multidimensional concept of social capital. Secondly, it provides a single, synthetic, measure capturing that particular configuration of social capital which the literature generally associates with positive economic outcomes. This measure is here referred to as “developmental social capital”.
    Keywords: Social capital, Social networks, Economic development, Principal component analysis, Multiple factor analysis
    JEL: A12 O10 O18 R11
    Date: 2005–06–29
  6. By: Fabio Sabatini (University of Rome La Sapienza)
    Abstract: This paper carries out an empirical assessment of the relationship between social capital and the quality of economic development in Italy. The analysis draws on a dataset collected by the author including about two hundred variables representing different aspects of economic development and four “structural” dimensions of social capital. The quality of development is measured through human development and indicators of the state of health of urban ecosystems, public services, gender equality, and labour markets, while social capital is measured through synthetic indicators representing strong family ties, weak informal ties, voluntary organizations, and political participation. The quality of development exhibits a strong positive correlation with bridging weak ties and a negative correlation with strong family ties. Particularly, the analysis shows a strong correlation between informal ties and an indicator of “social well-being” (synthetizing gender equality, public services and labour markets) and between voluntary organizations and the state of health of urban ecosystems. Active political participation proves to be irrelevant in terms of development and well-being. Finally, the role of public spending for education, health care, welfare work, and the environment protection is analysed, revealing a scarce correlation both with social capital and development indicators.
    Keywords: Social capital, Social networks, Public spending, Economic development, Principal component analysis
    JEL: O15 O18 R11
    Date: 2005–06–29
  7. By: Teresa Ciabattari (Sonoma State University)
    Abstract: The purpose of this paper is to examine work-family conflict among low-income, unmarried mothers. I examine how social capital affects work-family conflict and how both social capital and work-family conflict affect employment. I analyze the Fragile Families and Child Wellbeing Study, a national sample of non-marital births collected in 1998-2000 and 1999-2002. Results show that social capital reduces unmarried mothers' reports of work-family conflict, especially for low-income women. In addition, mothers who report high levels of work-family conflict are less likely to be employed; this pattern holds for women who are not looking for work as well as those who are. However, even at high levels of conflict, low-income women are more likely to be employed. The results suggest that work-family conflict has two consequences for unmarried women: it keeps them out of the labor force and makes it more difficult for women who want to work to maintain employment stability.
    Keywords: work-family, work, family, conflict, low-income, unmarried, mothers, social, capital
    JEL: J1 H4 I3
    Date: 2005–06
  8. By: Roberto Galbiati; Pietro Vertova
    Abstract: Laws consist of two components: the ‘obligations’ they express and the ‘incentives’ designed to enforce them. In this paper we run a public good experiment to test whether or not obligations have any independent effect on cooperation in social dilemmas. The results show that, for given marginal incentives, different levels of minimum contribution required by obligation determine significantly different levels of average contributions. Moreover, unexpected changes in the minimum contribution set up by obligation have asymmetric dynamic effects on the levels of cooperation: a reduction does not alter the descending trend of cooperation, whereas an increase induces a temporary re-start in the average level of cooperation. Nonetheless, obligations per se cannot sustain cooperation over time.
    Keywords: Obligation, Incentives, Public Good Game, Experiments.
    JEL: K40 H26 C92 C91
    Date: 2005–04
  9. By: Todd L. Cherry (Appalachian State University); John A. List
    Abstract: Recent experimental evidence has led to a debate about the nature of utility functions in which people are concerned about the amount others earn, and what factors heighten or diminish social preference. We explore fairness by examining behavior across three variants of the dictator game. Using data from nearly 200 dictators allocating as much as $100 each, we observe that fairness considerations are very powerful—when subjects could reasonably believe that disproportionately low offers are “fair”, only 8-12 percent of dictators make positive offers. Examining the comparative static results from these allocation decisions, we find that recent theoretical models of inequality do a respectable job of explaining the data patterns.
    Date: 2004
  10. By: Michael Maschler
    Abstract: A 4-person quota game is analyzed and discussed, in which players find it beneficial to pay others, in order to encourage favorable coalition structure.
    Keywords: game theory; cooperative games; power of a coalition; coalition formations; experiments in game theory
    Date: 2004
  11. By: Adato, Michelle; Ahmed, Akhter U.; Lund, Francie
    Abstract: "In Africa and elsewhere, safety nets were promoted in the 1980s as a response to the (presumably short-term) adverse effects of structural adjustment. Though some safety nets had a developmental component, safety nets are still largely associated with the idea of a short-term buffer. “Social protection” is a newer term that incorporates safety net programs but also includes a role for renewed state involvement, emphasizes a longer-term developmental approach, includes social assistance and social insurance, and is often advocated as a right rather than a reactive form of relief. Social protection policy addresses not only programs aimed at reducing the impact of shocks and coping with their aftermath, but also interventions designed to prevent shocks and destitution in the first place. Most societies have private interhousehold, intrafamily, and intrahousehold transfers that promote resilience to shocks, mitigating their negative effects. However, in countries or communities where people are universally poor, there is less to share, particularly in times of shocks that affect all or many in the society (such as drought, floods, AIDS, or widespread structural unemployment) — which is precisely when the need for help is most critical." from Text
    Keywords: Safety nets ,Social protection ,Transfers ,
    Date: 2004

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