nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2006‒06‒10
ten papers chosen by
Fabio Sabatini
Universita degli Studi di Roma, La Sapienza

  1. Strategic Basins of Attraction, the Farsighted Core, and Network Formation Games By Page Jr, Frank H; Wooders, Myrna H
  2. Publish or peer-rich ? The role of skills and networks in hiring economics professors By Pierre-Philippe Combes; Laurent Linnemer; Michael Visser
  3. Communication Networks with Endogenous Link Strength By Bloch, Francis; Dutta, Bhaskar
  6. Crime as a local public bad, neighbourhood observation and reporting By Siddhartha Bandyopadhyay and Kalyan Chatterjee
  7. Local Network Externalities and Market Segmentation By Banerji, A; Dutta, Bhaskar
  8. Parental unemployment and children's school performance By Öster, Anna
  9. Happiness and the Human Development Index : The Paradox of Australia By Blanchflower, David G; Oswald, Andrew J
  10. How Does Marriage Affect Physical and Psychological Health? A Survey of the Longitudinal Evidence By Wilson, Chris M; Oswald, Andrew J

  1. By: Page Jr, Frank H (Department of Finance, University of Alabama); Wooders, Myrna H (Department of Economics, Vanderbilt University and Department of Economics, University of Warwick)
    Abstract: We make four main contributions to the theory of network formation. (1) The problem of network formation with farsighted agents can be formulated as an abstract network formation game. (2) In any farsighted network formation game the feasible set of networks contains a unique, finite, disjoint collection of nonempty subsets having the property that each subset forms a strategic basin of attraction. These basins of attraction contain all the networks that are likely to emerge and persist if individuals behave farsightedly in playing the network formation game. (3) A von Neumann Morgenstern stable set of the farsighted network formation game is constructed by selecting one network from each basin of attraction. We refer to any such von Neumann-Morgenstern stable set as a farsighted basis. (4) The core of the farsighted network formation game is constructed by selecting one network from each basin of attraction containing a single network. We call this notion of the core, the farsighted core. We conclude that the farsighted core is nonempty if and only if there exists at least one farsighted basin of attraction containing a single network. To relate our three equilibrium and stability notions (basins of attraction, farsighted basis, and farsighted core) to recent work by Jackson and Wolinsky (1996), we define a notion of pairwise stability similar to the Jackson-Wolinsky notion and we show that the farsighted core is contained in the set of pairwise stable networks. Finally, we introduce, via an example, competitive contracting networks and highlight how the analysis of these networks requires the new features of our network formation model.
    Keywords: Basins of attraction ; Network formation ; Supernetworks ; Farsighted core ; Nash networks
    JEL: A14 D20 J00
    Date: 2005
  2. By: Pierre-Philippe Combes; Laurent Linnemer; Michael Visser
    Abstract: This paper analyzes the determinants of success at the concours d'agrégation en sciences économiques. This is a centralized hiring procedure through which professors of economics are selected in France. Using detailed data from all concours held between 1984 and 2003, we focus on the role of the candidates' publication records (number and quality of scientific articles) and networks (defined as professional links between candidates and the jury members who take the recruitment decisions). Both sets of variables have statistically significant effects on the likelihood of getting hired. The effect of network connections is important in the sense that a substantial improvement of the publication record is needed to compensate for not being linked to the jury.
    Keywords: Employment ; Hiring; Professional network
    JEL: M51
    Date: 2006–05
  3. By: Bloch, Francis (GREQAM, Universite d Aix-Marseille,); Dutta, Bhaskar (Department of Economics, University of Warwick)
    Abstract: This paper analyzes the formation of communication networks when players choose endogenously their investment on communication links. We consider two alternative de?nitions of network reliability ; product reliability, where the decay of information depends on the product of the strength of communication links, and min reliability where the speed of connection is a¤ected by the weakest communication link. When investments are separable, the architecture of the efficient network depends crucially on the shape of the transformation function linking investments to the quality of communication links. With increasing marginal returns to investment, the efficient network is a star ; with decreasing marginal returns, the con?ict between maximization of direct and indirect bene?ts prevents a complete characterization of efficient networks. However, with min reliability, the efficient network must be a tree. Furthermore, in the particular case of linear transformation functions, in an e¢ cient network, all links must have equal strength. When investments are perfect complements, the results change drastically : under product reliability, the efficient network must contain a cycle, and is in fact a circle for small societies. With min reliability, the e¢ cient network is either a circle or a line. As in classical models of network formation, e fficient networks may not be supported by private invesment decisions. We provide examples to show that the star may not be stable when the transformation functions is strictly convex. We also note that with perfect substitutes and perfect complements (when the e¢ cient network displays a very symmetric structure), the e¢ cient network can indeed be supported by private investments when the society is large.
    Keywords: communication networks ; network reliability
    JEL: D85 C70
    Date: 2005
    Abstract: While one stream of research in partner selection has emphasized stability in a firm’s social network, another stream has emphasized the need to expand a firm’s network. In order to reconcile these two perspectives, we explore transaction, partner and macro conditions that lead firms to work with unfamiliar partners. Using a unique hand-collected dataset, results from the formation of private equity investment syndicates demonstrate that firms are more likely to select unfamiliar partners for lower levels of primary and behavioral uncertainty and higher levels of competition. Our findings provide insights in conditions that lead firms to expand their social network.
    Date: 2006–03
  5. By: Richard Barrett (LSE); Maurice Salles (CREM-CNRS)
    Date: 2006
  6. By: Siddhartha Bandyopadhyay and Kalyan Chatterjee
    Abstract: We examine the effects of giving incentives for people to report crime on crime rates. In particular, we look at what happens when the costs of reporting are negligible and the cost of being interrogated by the police are high in a rational choice model of crime and crime reporting. Perverse equilibria where everyone reports or no one reports (and thus reports have no informational value) emerge. This happens both in a model where police make rational inferences about crime based on reports as well as in a model where police investigate according to fixed rules, operating under a fixed budget. Importantly, generating more reports about crime could actually increase equilibrium crime rates. This occurs via a resource thinning effect caused by "too many" reports. Hence, from a policy perspective increasing incentives for neighbours to report suspicious activities may prove to be counterproductive. We also show how different ways of profiling certain groups of people can either increase or decrease crime rates in the profiled group.
    Keywords: Neighbourhood, crime reporting and multiple equilibria
    JEL: C72 D82
    Date: 2006–05
  7. By: Banerji, A (Delhi School of Economics, University of Delhi); Dutta, Bhaskar (Department of Economics, University of Warwick,)
    Abstract: This paper models interaction between groups of agents by means of a graph where each node represents a group of agents and an arc represents bilateral interaction. It departs from the standard Katz-Shapiro framework by assuming that network benefits are restricted only amongst groups of linked agents. It shows that even if rival firms engage in Bertrand competition, this form of network externalities permits strong market segmentation in which firms divide up the market and earn positive profits. The analysis also shows that some graphs or network structures do not permit such segmentation, while for others, there are easy to interpret conditions under which market segmentation obtains in equilibrium
    Keywords: network structure ; network externalities ; price competition ; market segmentation
    JEL: D7
    Date: 2005
  8. By: Öster, Anna (Konjunkturinstitutet)
    Abstract: This study investigates the effect of parental unemployment on children’s school performance. We use individual level data for all children completing lower secondary school in Sweden in 1990 directly moving on to three years of upper secondary school. We control for family and individual heterogeneity by means of lower secondary school GPA. The huge variation in Swedish unemployment during the beginning of the 1990s provides an ideal setting for testing the hypothesis that parental unemployment affects children’s school performance. Our results indicate that having an unemployed father has a negative effect on children’s school performance while having an unemployed mother has a positive effect.
    Keywords: School performance; unemployment
    JEL: E24 I21 J12
    Date: 2006–05–22
  9. By: Blanchflower, David G (Dartmouth College); Oswald, Andrew J (Warwick University and Harvard University)
    Abstract: According to the well-being measure known as the U.N. Human Development Index, Australia now ranks 3rd in the world and higher than all other English-speaking nations. This paper questions that assessment. It reviews work on the economics of happiness, considers implications for policymakers, and explores where Australia lies in international subjective well-being rankings. Using new data on approximately 50,000 randomly sampled individuals from 35 nations, the paper shows that Australians have some of the lowest levels of job satisfaction in the world. Moreover, among the sub-sample of English-speaking nations, where a common language should help subjective measures to be reliable, Australia performs poorly on a range of happiness indicators. The paper discusses this paradox. Our purpose is not to reject HDI methods, but rather to argue that much remains to be understood in this area.
    Keywords: Well-being ; happiness ; HDI ; macroeconomics
    JEL: E6
    Date: 2005
  10. By: Wilson, Chris M (University of East Anglia); Oswald, Andrew J (University of Warwick and Harvard University)
    Abstract: This paper examines an accumulating modern literature on the health benefits of relationships like marriage. Although much remains to be understood about the physiological channels, we draw the judgment, after looking across many journals and disciplines, that there is persuasive longitudinal evidence for such effects. The size of the health gain from marriage is remarkable. It may be as large as the benefit from giving up smoking.
    Keywords: mortality ; health ; marriage ; happiness ; longitudinal
    Date: 2005

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