nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2006‒03‒18
seventeen papers chosen by
Fabio Sabatini
Universita degli Studi di Roma, La Sapienza

  1. The Impact of Group Membership on Cooperation and Norm Enforcement: Evidence using Random Assignment to Real Social Groups By Lorenz Goette; David Huffman; Stephan Meier
  2. Deciding to distrust By Iris Bohnet; Stephan Meier
  3. How Mafias Migrate: The Case of the 'Ndrangheta' in Northern Italy By Federico Varese
  4. The Evolution of Collective Action By David P. Myatt; Chris Wallace
  5. Scientific Networks and Co-authorship By Marcel Fafchamps; Marco J. van der Leij; Sanjeev Goyal
  6. Networks of Small Producers for Technological Innovation: Some Models By Chandra Pankaj
  7. The Happiness Gains from Sorting and Matching in the Labor Market By Simon Luechinger; Alois Stutzer; Rainer Winkelmann
  8. Communautarist networks in African rainforests By Jean-Marc Roda; Nsitou Mabiala
  9. Performance Pay and the Erosion of Worker Cooperation: Field Experimental Evidence By Stephen Burks; Jeffrey Carpenter; Lorenz Goette
  10. Heterogeneous Social Preferences and the Dynamics of Free Riding in Public Goods By Urs Fischbacher; Simon Gächter
  11. The impact of housing rehabilitation on local neighborhoods: the case of St. Joseph's Carpenter Society By Marvin M. Smith; Christy Chung Hevener
  12. Youth Unemployment and Crime in France By Denis Fougère; Francis Kramarz; Julien Pouget
  13. Actuarial Fairness or Social Justice? A Gender Perspective on Redistribution in Pension Systems By Jay Ginn
  14. Self-Serving Biases in Bargaining By Kohnz, Simone
  16. Informal Care and Employment in England: Evidence from the British Household Panel Survey By Axel Heitmueller; Pierre-Carl Michaud
  17. Do Peers Affect Student Achievement in China's Secondary Schools? By Weili Ding; Steven Lehrer

  1. By: Lorenz Goette (University of Zurich, CEPR and IZA Bonn); David Huffman (IZA Bonn); Stephan Meier (Federal Reserve Bank of Boston)
    Abstract: Due to incomplete contracts, efficiency of an organization depends on willingness of individuals to take non-selfish actions, e.g., cooperate when there is no incentive to do so, or punish inefficient actions by others. Organizations also constitute a social boundary, or group. We investigate whether this social aspect of organizations has an important benefit, fostering unselfish cooperation and norm enforcement within the group, but whether there is also a dark side, in the form of hostility between groups. Our experiment provides the first evidence without the confounding effect of self-selection into groups. Individuals are randomly assigned to different platoons during a four-week portion of officer training in the Swiss Army. We conduct choice experiments - simultaneous prisoner’s dilemma games, with and without third-party punishment - in week three. Random assignment significantly increases willingness to cooperate with fellow platoon members. Assignment does not lead to hostility, in the sense of vindictive punishment of outsiders, but does affect norm enforcement, enhancing willingness to enforce a norm of cooperation towards fellow platoon members. This suggests that the social aspect of organizations motivates efficient behavior even when ordinary incentives fail, and helps explain practices designed to foster social ties or group identification within an organization.
    Keywords: organizations, in-group favoritism, social identity, punishment
    JEL: D23 J00
    Date: 2006–03
  2. By: Iris Bohnet; Stephan Meier
    Abstract: We employ experiments to illustrate one factor contributing to the lack of distrust in the recent corporate scandals: Trust rather than no trust was the default. People are more trusting when the default is full trust than when it is no trust. We introduce a new game, the distrust game (DTG), where the default is full trust and find that in it, trust levels are higher than in the Berg, Dickhaut, and McCabe (1995) trust game (TG), where the default is no trust. At the same time, trustworthiness levels are lower in the DTG than in the TG. Agents (second movers) punish distrust more in the DTG than the lack of trust in the TG, but principals (first movers) do not correctly anticipate this. The distrust game produces more efficient outcomes than the trust game but also more inequality: Principals end up much worse than their agents in the DTG.
    Keywords: Trust ; Corporations - Corrupt practices
    Date: 2005
  3. By: Federico Varese (Centre for Criminology, University of Oxford)
    Abstract: What are the conditions conducive to long-term transplantation of mafia groups in new territories? This paper systematically reviews a number of factors that facilitate such an outcome, including: migration from territories with high mafia density; the policy of forcing criminals to resettle outside their region of origin; the existence of mafia wars; two different systems of recruitment into mafia families (merit- and kin-based recruitment); the level of interpersonal trust in the new territory; and the demand for criminal protection. The paper then explores two attempts at transplantation by members of the Calabria-based mafia group `Ndrangheta to the town of Bardonecchia (Piedmont region) and to Verona (Veneto region). While the former case was successful, the latter failed. The paper concludes that features of the local economy – the presence of significant sectors of the economy unprotected by the state and a local rather than export orientation – generate a demand for criminal protection, especially protection against competition, and a demand for services of dispute settlement. Successful transplantation occurs in the presence of such a demand. Generalized migration or forced resettlement of mafiosi are not sufficient to predict transplantation. The paper shows that a high level of interpersonal trust among local law-abiding residents is not sufficient to hinder mafia transplantation, contrary to established theories of social capital and trust.
    Date: 2006–03–15
  4. By: David P. Myatt; Chris Wallace
    Abstract: A public good is produced if and only if a team of m or more volunteers contribute to it. An equilibrium-selection problem leads to the questions: will collective action succeed? If so, who will participate in the team? The paper studies the evolution of collective action: as part of a strategy-revision process, updating players choose quantal responses to existing play. With symmetric players, success depends upon the cost of contribution, the benefit from provision, and the critical team-size m; the relative variability of costs and benefits, and their correlation, are also critical. When players differ, successful teams consist of either the most efficient contributors, or those with the most idiosyncratic preferences. The addition of a single "bad apple" (for instance, an individual whose costs are particularly variable) to a population in which a successful team operates may result in destabilisation: over time, the bad apple might supplant an existing contributor, prompting a collapse.
    Keywords: Collective Action, Evolution, Teams, Equilibrium Selection, Exponential Cost, Rooted Trees.
    JEL: C72 C73 H41
    Date: 2005
  5. By: Marcel Fafchamps; Marco J. van der Leij; Sanjeev Goyal
    Abstract: Using a database of all published articles in economic journals over the last 30 years, we investigate the determinants of scientific co-authorship. We find that, controlling for pair-wise fixed effects and author productivity, a new collaboration emerges faster if the two authors are more closely connected, either directly or indirectly, through collaborations with others. This effect is strong and robust. It is consistent with a referral model of the formation of scientific collaborations. We also find that large differences in research output between authors favor co-authorship, suggesting that scientific collaboration is more likely between authors with dissimilar ability and experience. This effect disappears if we limit the data to highly productive authors.
    Keywords: Job Referral, Networks, Assortative Matching, Scientific Collaboration, Academia, Economics
    JEL: J41 L14
    Date: 2006
  6. By: Chandra Pankaj
    Abstract: Small producers face a variety of challenges - some related to markets and others related to capabilities. Inability to develop technological capabilities has often restricted small firms from growing large. In this paper, we present learning from three global networks , i.e., TAMA in Japan, Wenzhou in China and Rajkot in India, that have adopted a variety of mechanisms of coordination between small producers and has led to both capability enhancement and demand enhancement. We argue that the capability enhancement effects play as significant a role as demand enhancement effects in the growth of small firms. Coordination that allows firms to improve their capabilities enhances both productivity as well as innovative capabilities to develop new products and processes. The paper, with the help of these three case studies, presents a generic model for SME development that is based on acquiring distinctive capabilities and linkages with other small producers or other members of the supply chain. We propose distinctive determinants of a collaborative model for engaging SMEs in technological innovation over a period of time. These are : Focus of the Firm, Interactive Producers, Processing and Product Manufacturing, Innovation Investment, Markets, Market Makers (and market making processes), and Regulatory Support.
    Date: 2006–03–07
  7. By: Simon Luechinger (University of Zurich); Alois Stutzer (University of Zurich and IZA Bonn); Rainer Winkelmann (University of Zurich and IZA Bonn)
    Abstract: Sorting of people on the labor market not only assures the most productive use of valuable skills but also generates individual utility gains if people experience an optimal match between job characteristics and their preferences. Based on individual data on reported satisfaction with life it is possible to assess these latter gains from matching. We introduce a two-equation ordered probit model with endogenous switching and study self-selection into government and private sector jobs. We find considerable gains from matching amounting to an increase in the fraction of very satisfied workers from 53.8 to 58.8 percent relative to a hypothetical random allocation of workers to the two sectors.
    Keywords: matching, ordered probit, public sector employment, selection, switching regression, subjective well-being
    JEL: D60 I31 J24 J45
    Date: 2006–03
  8. By: Jean-Marc Roda; Nsitou Mabiala
    Abstract: Since the 1970s world trade in unprocessed wood or preprocessed wood reached a stable level between 150 and 200 million m3, while, since 1985, world consumption varies between 3.2 and 3.4 billion m3 annually1. Thus, woodwork networks seem to be caught between two worlds with virtually independent structures, on the one hand, in developed countries, and, on the other hand, in developing countries. However, this apparent period of stabilization was undoubtedly a period of development, preparing the implementation of new organizations of production, whose forerunners emerge since the mid-1990s. The determining criteria are the ability to react and the rigorous response to demand. The very flexible strategies of supply and the mobility of capital are organized by companies on a global scale, which casts doubts on forest policies.
    JEL: L73
    Date: 2004–05
  9. By: Stephen Burks (University of Minnesota, Morris and IZA Bonn); Jeffrey Carpenter (Middlebury College and IZA Bonn); Lorenz Goette (University of Zurich, CEPR and IZA Bonn)
    Abstract: We report the results of a field experiment with bicycle messengers in Switzerland and the United States. Messenger work is individualized enough that firms can choose to condition pay on it, but significant externalities in messenger behavior nonetheless give their on-the-job interactions the character of a social dilemma. Firms therefore suffer efficiency losses when messengers fail to cooperate. Second-mover behavior in our sequential Prisoner's Dilemma allows us to characterize the cooperativeness of our participants. We find that messengers, like our student controls, have heterogeneous social preferences, but are much more cooperative than students. Among messengers, we find that employees at firms that pay for performance are significantly less cooperative than those who are paid hourly or are members of cooperatives. To examine whether the difference is the result of treatment or selection we exploit the fact that firm type is location-specific in Switzerland and that entering messengers must work in performance pay firms in the U.S. We find that the erosion of cooperation under performance pay is predominantly due to treatment, and that the treatment effect is relatively rapid, more akin to the differential cueing of a behavioral norm than the gradual acquisition of a new preference.
    Keywords: field experiment, social preference, altruism, conditional cooperation, egoism, social dilemma
    JEL: C72 C78 C93 D23 J33 J54 Z13
    Date: 2006–03
  10. By: Urs Fischbacher (University of Zurich); Simon Gächter (University of Nottingham, CESifo and IZA Bonn)
    Abstract: We provide a direct test of the role of social preferences in voluntary cooperation. We elicit individuals' cooperation preference in one experiment and make a point prediction about the contribution to a repeated public good. This allows for a novel test as to whether there are "types" of players who behave consistently with their elicited preferences. We find clear-cut evidence for the existence of "types". People who express free rider preferences show the most systematic deviation from the predicted contributions, because they contribute in the first half of the experiment. We also show that the interaction of heterogeneous types explains a large part of the dynamics of free riding.
    Keywords: public goods games, experiments, voluntary contributions, conditional cooperation, free riding
    JEL: C91 C72 H41 D64
    Date: 2006–03
  11. By: Marvin M. Smith; Christy Chung Hevener
    Abstract: This paper presents the results of a Philadelphia Fed study that analyzes whether the community development efforts of a nonprofit in Camden, NJ, have an effect on local neighborhoods
    Keywords: Home ownership ; Housing
    Date: 2005
  12. By: Denis Fougère (CNRS, CREST-INSEE, CEPR and IZA Bonn); Francis Kramarz (CREST-INSEE, CEPR and IZA Bonn); Julien Pouget (CREST-INSEE and IZA Bonn)
    Abstract: In this paper we examine the influence of unemployment on property crimes and on violent crimes in France for the period 1990 to 2000. This analysis is the first extensive study for this country. We construct a regional-level data set (for the 95 départements of metropolitan France) with measures of crimes as reported to the Ministry of Interior. To assess social conditions prevailing in the département in that year, we construct measures of the unemployment rate as well as other social, economic and demographic variables using multiple waves of the French Labor Survey. We estimate a classic Becker type model in which unemployment is a measure of how potential criminals fare in the legitimate job market. First, our estimates show that in the cross-section dimension, crime and unemployment are positively associated. Second, we find that increases in youth unemployment induce increases in crime. Using the predicted industrial structure to instrument unemployment, we show that this effect is causal for burglaries, thefts, and drug offences. To combat crime, it appears thus that all strategies designed to combat youth unemployment should be examined.
    Keywords: crime, youth unemployment
    JEL: J19 K42 J64 J65
    Date: 2006–03
  13. By: Jay Ginn (Centre for Research on Ageing and Gender Sociology Department, University of Surrey)
    Keywords: Pensions system, redistribution, gender issues
    Date: 2004–06
  14. By: Kohnz, Simone
    Abstract: There is strong evidence that in bargaining situations with asymmetric outside options people exhibit self-serving biases concerning their fairness judgements. Moreover, psychological literature suggests that this can be a driving force of bargaining impasse. This paper extends the notion of inequity aversion to incorporate self-serving biases due to asymmetric outside options and analyses whether this leads to bargaining breakdown. I distinguish between sophisticated and naive agents, that is, those agents who understand their bias and those who do not. I find that breakdown in ultimatum bargaining results from naiveté of the proposers.
    JEL: D63 C7 A13
    Date: 2005–06
  15. By: Maaja Vadi; Krista Jaakson
    Abstract: Honesty is deemed as crucial ground for ethical behaviour in various respects. The aim of this paper is to explore to what extent and in what ways the individual value honest signifies in the organisations of Baltic States and Russia and to draw some managerial implications on the basis of our findings. The subjects of study had different cultural background (Estonians from Estonia, Russians from Russia, Lithuania, Latvia, and Estonia) and they were asked to rank their own terminal and instrumental values, including the value honest as well as to speculate how their co-workers would rank the same list of values. Consequently, there were two lists of terminal and instrumental values for every respondent and the following analysis focuses on the comparisons of the importance, impact of other values and socio-demographic characteristics (i.e. gender, age, organisational position, and country of residence). One of the most important findings of our study is that the assessment of peer’s value honest tells the most how important honest is for the focal person. Results reveal also the role of some other personal values as well as the country of residence in respect with the importance of value honest.
    Keywords: ethical behaviour, honesty, personal values
    Date: 2006
  16. By: Axel Heitmueller (Department for Work and Pensions, UK, London Business School and IZA Bonn); Pierre-Carl Michaud (RAND Corporation and IZA Bonn)
    Abstract: More than 40% of the respondents in the British Household Panel Survey provide informal care at least for one year within the period 1991-2003 and carers are usually less likely to hold simultaneously a paid job. There is little evidence on the mechanism that links informal care provision and labour market outcomes. This paper provides evidence on the pathways through which this pattern arises using a multivariate dynamic panel data model that accounts for state-dependence, feedback effects and correlated unobserved heterogeneity. We find evidence of a causal link from informal care to employment with employment rates reduced by up to 6 percentage points. However, this effect is only found for co-residential carers who account for one third of the population of carers and less than 5 percent of the overall labor force. For the same group, a significantly smaller link from employment to care provision is found. A micro-simulation exercise using the model estimates suggest that the overall potential pressure on the provision of informal care created by a rise in the employment rate is minimal.
    Keywords: informal care, employment dynamics, aging, dynamic panel data models
    JEL: I0 J2 C3
    Date: 2006–03
  17. By: Weili Ding (Queen's University); Steven Lehrer (Queen's University)
    Abstract: Peer effects have figured prominently in debates on school vouchers, desegregation, ability tracking and anti-poverty programs. Compelling evidence of their existence remains scarce for plaguing endogeneity issues such as selection bias and the reflection problem. This paper is among the first to firmly establish the link between peer performance and student achievement, using a unique dataset from China. We find strong evidence that peer effects exist and operate in a positive and nonlinear manner; reducing the variation of peer performance increases achievement; and our semi-parametric estimates clarify the tradeoffs facing policymakers in exploiting positive peers effects to increase future achievement.
    Keywords: Peer Effects, Ability Grouping, Selection on observables, China, Academic performance, Teacher quality
    JEL: I2 Z13 P36
    Date: 2005–02

This nep-soc issue is ©2006 by Fabio Sabatini. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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