nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2006‒11‒12
thirteen papers chosen by
Fabio Sabatini
Universita degli Studi di Roma, La Sapienza

  1. Does Social Capital Reduce Crime? By Paolo Buonanno; Daniel Montolio; Paolo Vanin
  2. Cooperative Behavior and Social Interaction By Jack Ochs; John Duffy
  3. Crime and Punishment in the "American Dream" By Di Tella, Rafael; Dubra, Juan
  4. Belief merging and revision under social influence: An explanation for the volatility clustering puzzle By Siddiqi, Hammad
  5. Externalities, Social Pressures, and Political Parties By Amihai Glazer
  6. Gender disparities in education - needs community participation By Pandey, Adya Prasad
  7. Subject Pool Effects in a Corruption Experiment: A Comparison of Indonesian Public Servants and Indonesian Students By Vivi Alatas; Lisa Cameron; Ananish Chaudhuri; Nisvan Erkal; Lata Gangadharan
  8. Dispersed Interactions of Urban Residents By Bazhanov, Andrei; Hartwick, John
  9. Gender and Corruption: Insights from an Experimental Analysis By Vivi Alatas; Lisa Cameron; Ananish Chaudhuri; Nisvan Erkal; Lata Gangadharan
  10. Bandwidth Allocation in Peer-to-Peer File Sharing Networks By Albert Creus Mir; Ramon Casadesus-Masanell; Andres Hervas-Drane
  11. Stable and Efficient Electronic Business Networks: Key Players and the Dilemma of Peripheral Firms By Kai Suelzle
  12. Determinants of Moral Hazard in Microfinance: Empirical Evidence from Joint Liability Lending Programs in Malawi By Simtowe, Franklin; Zeller, Manfred
  13. Adverse Network Effects, Moral Hazard, and the Case of Sport-Utility Vehicles By Matthew G. Nagler

  1. By: Paolo Buonanno (University of Bergamo); Daniel Montolio (University of Barcelona); Paolo Vanin (University of Padova)
    Abstract: We investigate the effects of civic norms and associational networks on crime rates. Through their impact on trust and economic development, civic norms may raise the expected returns to crime, but they may also increase its opportunity cost and the feelings of guilt and shame attached to it. Associational networks may increase returns to non-criminal activities and raise detection probabilities, but they may also provide communication channels for criminals. The empirical assessment of these effects poses serious problems of endogeneity, omitted variables and measurement error. Italy's great variance in social and economic characteristics, its homogeneity in policies and institutions, and the availability of historical data on social capital in its regions allow us to minimise the first two problems. To tackle the third one, we exploit high and stable report rates for some forms of property crime. Once we address these problems, we find that both civic norms and associational networks have a negative and significant impact on property crimes across Italian provinces.
    Keywords: Civic norms, Associational networks, Property crime, Italy
    JEL: A14 K42 Z13
    Date: 2006–10
  2. By: Jack Ochs; John Duffy
    Date: 2006–01
  3. By: Di Tella, Rafael; Dubra, Juan
    Abstract: We observe that countries where belief in the "American dream" (i.e., effort pays) prevails also set harsher punishment for criminals. We know from previous work that beliefs are also correlated with several features of the economic system (taxation, social insurance, etc). Our objective is to study the joint determination of these three features (beliefs, punitiveness and economic system) in a way that replicates the observed empirical patterns. We present a model where beliefs determine the types of contracts that firms offer and whether workers exert effort. Some workers become criminals, depending on their luck in the labor market, the expected punishment, and an individual shock that we call "meanness". It is this meanness level that a penal system based on "retribution" tries to detect when deciding the severity of the punishment. We find that when initial beliefs differ, two equilibria can emerge out of identical fundamentals. In the "American" (as opposed to the "French") equilibrium, belief in the "American dream" is commonplace, workers exert effort, there are high powered contracts (and income is unequally distributed) and punishments are harsh. Economists who believe that deterrence (rather than retribution) shapes punishment can interpret the meanness parameter as pessimism about future economic opportunities and verify that two similar equilibria emerge.
    Keywords: beliefs; multiple equilibria; illegal behavior; fines; sentences.
    JEL: K42 K14 E62 P16
    Date: 2006–10
  4. By: Siddiqi, Hammad
    Abstract: A share price in a stock market can be thought of as arising out of an aggregation procedure. The price of a stock aggregates many individual beliefs into a collective one, the collective will of the market, so to speak. How does this aggregation come about? And is this aggregation fair in the sense that it correctly reflects the value? Furthermore,in the context of a stock market, it becomes immediately clear that belief merging cannot be separated from belief revision since investors in the market have a direct stake in what others think and clearly find it optimal to revise their beliefs in the light of the information about what others believe. We show that if investors are revising their beliefs not only after receiving new exogenous information but also after their social interactions with other investors and these revised beliefs are getting merged to generate the stock price under the accepted principles of finance (no arbitrage) then the resulting price dynamics explain a long standing puzzle in finance, the volatility clustering puzzle.
    Keywords: Volatility clustering; Social influence; Agent based simulation; Anomaly
    JEL: G1
    Date: 2006–08
  5. By: Amihai Glazer (Department of Economics, University of California-Irvine)
    Abstract: Members of political parties talk to each other often, and may thereby influence each other. For example, a liberal in a party of moderates may moderate his views. At the same time, the moderates in the party may become more sympathetic to liberal views. Voters in a district may favor such effects if they care about the ideology of officeholders in other districts. They may therefore prefer a candidate who affiliates with a party over an independent with the same position.
    Date: 2006–10
  6. By: Pandey, Adya Prasad
    Abstract: Education is the most important instrument for human resource development. Education of girls therefore, occupies top priority amongst various measures taken to improve the status of the girl child. The government has resolved to make the right to free and compulsory elementary education a Fundamental Right and to enforce it through suitable statutory measures. Universalisation of Elementary Education (UEE) has been accepted as a national goal since 1950. In order to achieve the goal, concerted efforts have been made and as a result, the elementary education system in India has become one of the largest in the world. The primary education enrolment rates of girls have a positive impact on economic well-being of women, their families and society in the long run. Since the mother carries the main burden of looking after the health of her child, how well she does this task depends on the knowledge and confidence that she gains from education.
    Keywords: Gender Disparities ediucation needs community participation; appandey; adyaprasad pandey; bhu; varanasi
    JEL: I31 A1 A19
    Date: 2006–08
  7. By: Vivi Alatas; Lisa Cameron; Ananish Chaudhuri; Nisvan Erkal; Lata Gangadharan
    Abstract: We report results from a corruption experiment with Indonesian public servants and Indonesian students. Our results suggest that although both subject pools show a high level of concern with the extent of corruption in Indonesia, the Indonesian public servant subjects have a significantly lower tolerance of corruption than the Indonesian students. We find no evidence that this is due to a selection effect. The reasons given by the public servants for either engaging in or not engaging in corruption suggest that the differences in behavior across the subject pools are driven by their different real life experiences. For example, when abstaining from corruption public servants more often cite the need to reduce the social costs of corruption as a reason for their actions, and when engaging in corruption they cite low government salaries or a belief that corruption is a necessary evil in the current environment. In contrast, students give more simplistic moral reasons. We conclude by arguing that experiments such as the one considered in this paper can be used to measure forward-looking attitudinal change in society and that results obtained from different subject pools can complement each other in the determination of such attitudinal changes.
    Keywords: Corruption, Experiments, Subject Pool Effects
    JEL: C91 D73 O12 K42
    Date: 2006
  8. By: Bazhanov, Andrei; Hartwick, John
    Abstract: Beckmann's interaction model has each resident touching base in face-to-face activity with every other resident at the other's residence per unit time. We re-work his resulting ''interaction city'' with each resident ''operating with'' a Cobb-Douglas utility function. Similar but somewhat ''richer'' outcomes occur. We also investigate a new case with intermediate dispersion of face-to-face activity, one with scale economies in trip-making.
    Keywords: Household spatial interactions; Dispersed residential activity
    JEL: R14 D11
    Date: 2006–11–09
  9. By: Vivi Alatas; Lisa Cameron; Ananish Chaudhuri; Nisvan Erkal; Lata Gangadharan
    Abstract: In recent years, a substantial body of work has emerged in the social sciences exploring differences in the behavior of men and women in various contexts. This paper contributes to this literature by investigating gender differences in attitudes towards corruption. It departs from the previous literature on gender and corruption by using experimental methodology. Attitudes towards corruption play a critical role in the persistence of corruption. Based on experimental data collected in Australia (Melbourne), India (Delhi), Indonesia (Jakarta) and Singapore, we show that while women in Australia are less tolerant of corruption than men in Australia, there are no significant gender differences in attitudes towards corruption in India, Indonesia and Singapore. Hence, our findings suggest that the gender differences found in the previous studies may not be nearly as universal as stated and may be more culture-specific. We also explore behavioral differences by gender across countries and find that there are larger variations in women’s attitudes towards corruption than in men’s across the countries in our sample.
    Keywords: Gender, Corruption, Experiments, Punishment, Multicultural Analysis
    JEL: C91 J16 K42 O12
    Date: 2006
  10. By: Albert Creus Mir (Universitat Politecnica de Catalunya); Ramon Casadesus-Masanell (Harvard Business School); Andres Hervas-Drane (Universitat Autonoma de Barcelona)
    Abstract: We present a model of bandwidth allocation in a stylized peer-to-peer ¯le sharing net- work. Given an arbitrary population of peers composed of sharers and freeriders, where all peers interconnect to maximize their allocated bandwidth, we derive the expected band- width obtained by sharers and freeriders. We show that sharers are always better o® than freeriders and that the di®erence decreases as the size of the network grows. This paper con- stitutes a ¯rst step towards providing a general analytical foundation for resource allocation in peer-to-peer networks.
    Keywords: Peer-to-Peer, Network formation, Resource allocation, Congestion
    Date: 2006–10
  11. By: Kai Suelzle (Ifo Institute for Economic Research at the University of Munich & Dresden University of Technology)
    Abstract: This paper studies a spatial model of electronic business network formation where firms build links based on a cost-benefit analysis. Benefits result from directly and indirectly connected firms in terms of knowledge flows, which are heterogeneous: a "key-player" (e.g. a firm providing an exchange platform in a business-to-business network) provides a higher level of knowledge flows than "peripheral" firms (e.g. tier 3 suppliers in a vertically differentiated industry). For intermediate cost values of link formation, stable and efficient network structures comprise only a subset of the total set of firms, excluding peripheral firms which are most distantly located to the key player. When link formation implies a certain degree of network congestion, the stable and efficient network size is smaller than in a model with bilateral decisions upon link formation between two firms.
    Keywords: Network Formation, Business-to-Business, Spatial Model
    JEL: C70 D85 L22
    Date: 2005–10
  12. By: Simtowe, Franklin; Zeller, Manfred
    Abstract: Moral hazard is widely reported as a problem in credit and insurance markets, mainly arising from information asymmetry. Although theorists have attempted to explain how group lending with joint liability can be an important tool for mitigating moral hazard among the poor, empirical studies are rare and sometimes give mixed results. In Malawi, for example, although, group lending with joint liability has been practiced for nearly four decades, the unwillingness to repay loans remains the single major cause of default. This paper examines the extent of occurrence of moral hazard and investigates its determinants of occurrence among joint liability lending programs from Malawi, using group level data from 99 farm and non-farm credit groups. Results reveal that peer selection, peer monitoring, peer pressure, dynamic incentives and variables capturing the extent of matching problems explain most of the variation in the incidence of moral hazard among credit groups. The implications are that joint liability lending institutions will continue to rely on social cohesion and dynamic incentives as a means to enhancing their performance which has a direct implication on their outreach, impact and sustainability.
    Keywords: moral hazard; joint liability; dynamic incentives; group lending; Malawi
    JEL: M21 M20
    Date: 2006–10–12
  13. By: Matthew G. Nagler (Lehman College, The City University of New York)
    Abstract: The paper examines a class of phenomena that combine adverse network effects with moral hazard, using the motor vehicle market as an example to develop and illustrate the key concepts. It is hypothesized that consumers behave as if there is a network externality with respect to vehicle size: the more large vehicles there are on the roads, the greater a consumer’s propensity to seek protection from them by driving a large vehicle herself. One consequence of this is that motor vehicle manufacturers are discouraged from making large vehicles less hazardous to other motorists. The paper measures the network effect and consequent moral hazard using disaggregate data on choice of vehicle type and related household characteristics, combined with a state-level measure of the incidence of traffic fatalities. The results show that for each 1 million light trucks that replace cars, between 961 and 1,812 would-be car buyers decide to buy a light truck instead, in reaction to the increased risk of death posed by the incremental light trucks. This network effect, when run in reverse, creates egregious incentives for vehicle manufacturers: for every life saved due to safety innovations that make light trucks less deadly to other motorists, manufacturers can expect to sell about 31 fewer light trucks.
    Keywords: Network Externalities, Moral Hazard, Highway Safety, Discrete Choice Models
    JEL: D00 D12 K10
    Date: 2005–10

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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