nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2006‒12‒16
twenty-six papers chosen by
Fabio Sabatini
Universita degli Studi di Roma, La Sapienza

  1. Altruism with Social Roots: An Emerging Literature. By Pablo Brañas-Garza; Maria Paz Espinosa
  2. Segregation in Networks. By Giorgio Fagiolo; Marco Valente; Nicolaas J. Vriend
  3. Competing for Customers in a Social Network By Pradeep Dubey; Rahul Garg; Bernard De Meyer
  4. How does leadership support the activity of communities of practice ? By Paul Muller
  5. Trust, Communication and Contracts: Experimental Evidence By Avner Ben-Ner; Louis Putterman
  6. The Emergence of Institutions By Santiago Sanchez-Pages; Stephane Straub
  7. Skilled Migration and Business Networks By Fredéric, DOCQUIER; Elisabetta, LODIGINI
  8. Coordination failures in network formation. By Nicolas Carayol; Pascale Roux; Murat Yıldızoglu
  9. Democracy, Rationality and Morality By Dennis C. Mueller
  10. The rise of individual performance pay By Kvaløy, Ola; Olsen, Trond E.
  11. Do academic laboratories correspond to scientific communities? Evidence from a large European university. By Rachel Levy; Paul Muller
  12. Interconnection and competition among asymmetric networks in the internet backbone market By Jahn,Eric; Pruefer,Jens
  13. Minority Rights and Charles Tilly’s Stateness By Franke Wilmer
  14. Interpersonal Styles and Labor Market Outcomes By Weinberg, Bruce A.; Borghans, Lex; Weel, Bas ter
  15. An investment game with third-party intervention By Gary Charness; Ramón Cobo-Reyes; Natalia Jiménez
  16. Peut-on se fier aux bases de données internationales sur la corruption? Une confrontation entre enquêtes-experts et enquêtes-ménages en Afrique subsaharienne By Mireille Razafindrakoto; François Roubaud
  17. Communication and Punishment in Voluntary Contribution Experiments By Olivier Bochet; Talbot Page; Louis Putterman
  18. The Impact of Institutions on Motherhood and Work By Daniela Del Boca; Silvia Pasqua; Chiara Pronzato
  19. Family and Politics: does parental unemployment cause right-wing extremism? By Thomas Siedler
  20. Competition and Participation in Religious Markets: Evidence from Victorian Scotland By Robert I. Mochrie; John W. Sawkins; Alexander Naumov
  21. Applications of Evolutionary Eceonomic Geography By Ron A. Boschma; Koen Frenken
  22. Can Endogenously Chosen Institutions Mitigate the Free-Rider Problem and Reduce Perverse Punishment? By Arhan Ertan; Talbot Page; Louis Putterman
  23. Strong Enforcement by a Weak Authority By Jakub Steiner
  24. Human Capital Inequality, Life Expectancy and Economic Growth By Amparo Castello-Climent; Rafael Domenech
  25. Dictators, Repression and the Median Citizen: An “Eliminations Model” of Stalin’s Terror (Data from the NKVD Archives) By Paul R. Gregory; Philipp J.H. Schr oder; Konstantin Sonin
  26. Micro-strategies of Contextualization: Cross-national Transfer of Socially Responsible Investment By Eva Boxenbaum; Jean-Pascal Gond

  1. By: Pablo Brañas-Garza (Universidad de Granada); Maria Paz Espinosa (Universidad del País Vasco)
    Abstract: This paper analyzes the emerging literature on the determinants of giving within a social network. We propose two main explanatory variables for previous experimental results on the friendship e¤ect. The first is social integration, which has a positive impact on giving. The second variable is strategic and is based on reciprocity: the possibility of ex-post favors. Econometric analysis shows that both variables play a positive (and significant) role.
    Keywords: giving, social networks, reciprocity, social integration.
    JEL: C91 D64 Z13
    Date: 2006–12–05
  2. By: Giorgio Fagiolo; Marco Valente; Nicolaas J. Vriend
    Abstract: Schelling (1969, 1971a,b, 1978) considered a simple model with individual agents who only care about the types of people living in their own local neighborhood. The spatial structure was represented by a one- or two-dimensional lattice. Schelling showed that an integrated society will generally unravel into a rather segregated one even though no individual agent strictly prefers this. We make a first step to generalize the spatial proximity model to a proximity model of segregation. That is, we examine models with individual agents who interact ’locally’ in a range of network structures with topological properties that are different from those of regular lattices. Assuming mild preferences about with whom they interact, we study best-response dynamics in random and regular non-directed graphs as well as in small-world and scale-free networks. Our main result is that the system attains levels of segregation that are in line with those reached in the lattice-based spatial proximity model. In other words, mild proximity preferences can explain segregation not just in regular spatial networks but also in more general social networks. Furthermore, segregation levels do not dramatically vary across different network structures. That is, Schelling’s original results seem to be robust also to the structural properties of the network.
    Keywords: Spatial proximity model, Social segregation, Schelling, Proximity preferences, Social networks, Undirected graphs, Best-response dynamics.
    JEL: C72 C73 D62
    Date: 2005
  3. By: Pradeep Dubey; Rahul Garg; Bernard De Meyer
    Date: 2006–12–08
  4. By: Paul Muller
    Abstract: the purpose of this paper is to present leadership as an important mechanism underlying the coordination and the cohesion of communities of practice. More precisely, it will be shown that an important factor conditioning the coordination and the cohesion of a community rests on the leaders’ capacity to influence individual behaviors. This capacity of influence is grounded on the high degrees of reputation and trust they enjoy within the community. However, coordination of individual behaviors is not ensured by the mere existence of leadership. A simulation model points out the conditions under which leadership forms an efficient coordinating device.
    Keywords: communities of practice, leadership, reputation, exit, loyalty, coordination, social simulation.
    JEL: L23 D23
    Date: 2006
  5. By: Avner Ben-Ner; Louis Putterman
    Date: 2006
  6. By: Santiago Sanchez-Pages; Stephane Straub
    Abstract: This paper analyzes how institutions aimed at coordinating economic interactions may appear. We build a model in which agents play a prisoners’ dilemma game in a hypothetical state of nature. Agents can delegate the task of enforcing cooperation in interactions to one of them in exchange for a proper compensation. Two basic commitment problems stand in the way of institution formation. The first one is the individual commitment problem that arises because an agent chosen to run the institution may prefer to renege ex post. The second one is a “collective commitment” problem linked to the lack of binding agreements on the fee that will be charged by the centre once it is designated. This implies first that a potentially socially efficient institution may fail to arise because of the lack of individual incentives, and second that even if it arises, excessive rent extraction by the institution may imply a sub-optimal efficiency level, explaining the heterogeneity of observed institutional arrangements. An institution is less likely to arise in small groups with limited endowments, but also when the underlying commitment problem is not too severe. Finally, we show that the threat of secession by a subset of agents may endogenously solve part of the second commitment problem.
    Keywords: Institution, Coordination, State of nature, Secession.
    JEL: C72 D02 O17 Z13
  7. By: Fredéric, DOCQUIER (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics); Elisabetta, LODIGINI (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics)
    Abstract: The role of migrants’ networks in promoting cross border investments has been stressed in the literature, possibly making migration and FDI complements rather than substitutes in the long run. In this paper, we estimate the magnitude of such business network externalities in dynamic empirical models of FDI-funded capital accumulation. We use original data on capital and migration stocks rather than flows. Regarding migrants, we distinquish the total and the skilled diasporas abroad. In both cross-sectional and panel frameworks, we find evidence of strong network externalities, mainly associated to the skilled diaspora. These network externalities are stronger for countries exhibiting intermediate corruption index.
    Keywords: FD1, Migration, Brain Drain, Network, Diaspo
    JEL: F2 O15 Z13
    Date: 2006–10–11
  8. By: Nicolas Carayol; Pascale Roux; Murat Yıldızoglu
    Abstract: In this paper, we make an exploratory use of numerical techniques (genetic algorithms and Monte Carlo simulations) to compute efficient and emergent networks in a spatialized version of the connections model of Jackson and Wolinski (1996). This approach allows us to observe and discuss the coordination failures that arise in a strategic network formation context with link-mediated positive externalities to connections and geographically based connection costs. Our results highlight that, depending on the strength of the externalities, emergent and efficient networks may share several structural properties. Nevertheless, emergent networks have too few local and distant connections and are also too less “coordinated” around some central agents than they should.
    Keywords: Strategic Network Formation; Efficiency; Stability; Coordination; Small Worlds; Genetic Algorithms; Monte Carlo Simulations.
    Date: 2006
  9. By: Dennis C. Mueller
    Abstract: The fundamental, underlying assumption in economics, public choice, and increasingly in political science and other branches of the social sciences is that individuals are rational actors. Many people have questioned the realism of this assumption, however, and considerable experimental evidence seems to refute it. This paper builds on recent findings from the field of evolutionary psychology to discuss the evolution of rational behavior in humans. It then goes on to relate this evolutionary process to the evolution of political institutions and in particular of democratic institutions. Length 58 pages
    Date: 2006–11
  10. By: Kvaløy, Ola (Norsk hotellhøgskole, Institutt for økonomi og ledelse, University of Stavanger); Olsen, Trond E. (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)
    Abstract: Why does individual performance pay seem to prevail in human-capital-intensive industries where teamwork is so common? We present a model that aims to explain this. In a repeated game model of relational contracting, we analyze the conditions for implementing peerdependent incentive regimes when agents possess indispensable human capital. We show that the larger the share of values that the agents can hold-up, the lower is the implementable degree of peer-dependent incentives. In a setting with team effects - complementary tasks and peer pressure, respectively - we show that while group-based incentives are optimal if agents are dispensable, it may be costly, and in fact suboptimal, to provide team incentives once the agents become indispensable.
    Keywords: Relational contracts; multiagent moral hazard; indispensable human capital
    JEL: D23 J33 L14
    Date: 2006–12–11
  11. By: Rachel Levy; Paul Muller
    Abstract: Although acknowledged as central in the economic literature, the issue of intra academic collaboration has been, insofar, relatively overlooked. This paper fills this gap by stressing the importance of communities in academic research. By analysing the publication behavior of researchers from a large European scientific university, we argue that in certain cases, the community level constitutes a relevant level for analysing the collaborative nature of scientific investigation. Indeed, the reality of research collaborations doesn’t always fit the institutional division of academic work provided by laboratories.
    Keywords: Economics of Science, Knowledge Intensive Communities, Academic Collaborations, Social Network Analysis.
    JEL: L31 O31 O32
    Date: 2006
  12. By: Jahn,Eric; Pruefer,Jens (Tilburg University, Center for Economic Research)
    Abstract: We examine the interrelation between interconnection and competition in the internet backbone market. Networks asymmetric in size choose among different interconnection regimes and compete for end-users. We show that a direct interconnection regime, Peering, softens competition compared to indirect interconnection since asymmetries become less influential when networks peer. If interconnection fees are paid, the smaller network pays the larger one. Sufficiently symmetric networks enter a Peering agreement while others use an intermediary network for exchanging traffic. This is in line with considerations of a non-US policy maker. In contrast, US policy makers prefer Peerings among relatively asymmetric networks.
    Keywords: Internet Backbone;Endogenous Network Interconnection;Asymmetric Networks; Two-Way Access Pricing
    JEL: L10 L96 D43
    Date: 2006
  13. By: Franke Wilmer
    Abstract: The connection between nation and state is far from settled, and though naturalized in ordinary political discourse, it is often regarded with circumspection by many social scientists. Can Charles Tilly’s application of Nettl’s idea of stateness to European state formation illuminate the nation/state relationship and if so, what does this reveal about the tension between national majorities and national minorities that produces civil strife, conflict, and even violence within states? This article explores the implications of the interplay between the international normative framework produced by European state formation that inevitably creates minorities in states on the one hand, and Tilly’s notion of stateness, on the other. How does the existence of minorities and the de facto privileging of national majorities within the state affect its ability to develop and sustain politically stable authoritative institutions?
    Keywords: minorities; nationality; Nation-state; pluralism; state building
    Date: 2006–05–20
  14. By: Weinberg, Bruce A. (Ohio State University and NBER); Borghans, Lex (ROA, University of Maastricht); Weel, Bas ter (UNU-MERIT)
    Abstract: This paper develops a framework to understand the role of interpersonal interactions in the labor market including task assignment and wages. Effective interpersonal interactions involve caring, to establish cooperation, and at the same time directness, to communicate in an unambiguous way. The ability to perform these tasks varies with personality and the importance of these tasks varies across jobs. An assignment model shows that people are most productive in jobs that match their style and earn less when they have to shift to other jobs. An oversupply of one attribute relative to the other reduces wages for people who are better with the attribute in greater supply. We present evidence that youth sociability affects job assignment in adulthood. The returns to interpersonal interactions are consistent with the assignment model.
    Keywords: Interpersonal Interactions, Wage Level, Wage Structure
    JEL: J21 J24 J31
    Date: 2006
  15. By: Gary Charness (University of California Santa Barbara); Ramón Cobo-Reyes (Department of Economic Theory and Economic History, University of Granada.); Natalia Jiménez (Department of Economic Theory and Economic History, University of Granada.)
    Abstract: This paper explores the effect of the possibility of third-party intervention on behavior in a variant of the Berg, Dickhaut, and McCabe (1995) “Investment Game”. A third-party’s material payoff is not affected by the decisions made by the other participants, but this person may choose to punish a responder who has been overly selfish. The concern over this possibility may serve to discipline potentially-selfish responders. We also explore a treatment in which the third party may also choose to reward a sender who has received a low net payoff as a result of the responder’s action. We find a strong and significant effect of third-party punishment, in both punishment regimes, as the amount sent by the first mover is more than 60% higher when there is the possibility of third-party punishment. We also find that responders return a higher proportion of the amount sent to them when there is the possibility of punishment, with this proportion slightly higher when reward is not feasible. Finally, third parties punish less when reward is feasible, but nevertheless spend more on the combination of reward and punishment when these are both permitted than on punishment when this is the only choice for redressing material outcomes.
    Keywords: Trust, punishment, third-party intervention, responsibility-alleviation
    JEL: A13 B49 C91 D63
    Date: 2006–12–14
  16. By: Mireille Razafindrakoto (DIAL, IRD, Paris); François Roubaud (DIAL, IRD, Paris)
    Abstract: (english) The emergence of institutions, governance and especially corruption as major development considerations has generated a whole host of international databases intended to measure these concepts. These databases are now widely used in both the academic world and for public policies, especially for aid allocation. This study looks at the pertinence and limits of global corruption indicators based on experts’ perceptions. The study draws on a wave of original surveys coordinated by the authors and conducted simultaneously in eight African countries. This wave combines two types of surveys on the same subject. The first type of survey covering a sample of over 35,000 people takes an objective measure of the frequency of petty bureaucratic corruption and its characteristics. The second type (mirror survey) reports on 350 experts’ opinions on the matter. A comparison of these two sources paints a clear-cut picture of the experts’ error of assessment. We show that the experts do not provide a good gauge of the real level of corruption. They systematically overestimate the frequency of corruption. Moreover, the ranking of countries derived from their perceptions does not tie in with reality. The experts’ measurement error is all the greater in that the countries are not well graded in the international bases, which penalises the poorest of them. The econometric analyses also find ideological biases, with experts tending to rank countries based on their own political preferences, and the existence of a coherent, but erroneous implicit cultural model of how “Africa works”. The experts tend to massively overestimate the population’s level of tolerance of corrupt practices and underestimate the importance it attaches to matters of “good governance”. These findings make a case for a more cautious and rational use of global governance indicators. Our study also confirms the need to supplement global indicators with surveys of the players concerned. _________________________________ (français) L’émergence des institutions, de la gouvernance et tout particulièrement de la corruption, comme enjeu majeur du développement a engendré la multiplication de bases de données internationales censées mesurer ces concepts. Cette étude s’interroge sur la pertinence et les limites des indicateurs globaux de corruption basés sur la perception des experts. Elle mobilise un dispositif d’enquêtes originales réalisées simultanément dans huit pays africains, couplant deux types d’enquêtes sur la même thématique. Les premières, menées auprès de la population (avec un échantillon de 35 000 personnes au total), permettent d’obtenir une mesure objective de l’incidence et des caractéristiques de la petite corruption bureaucratique. La seconde, menée auprès de 350 experts (enquête-miroir), mesure la perception que s’en font les experts. En confrontant ces deux sources, nous montrons que ces derniers surestiment systématiquement l’incidence de la corruption et que le classement des pays induits par leurs perceptions n’est pas corrélé avec la réalité. L’erreur d’appréciation des experts est d’autant plus forte que les pays sont mal notés dans les bases internationales, pénalisant les plus pauvres d’entre eux. Les analyses économétriques mettent également en évidence la présence de biais idéologiques, ainsi que l’existence d’un modèle culturel implicite, cohérent mais erroné, sur la façon dont « l’Afrique fonctionne ». Les experts ont tendance à surestimer massivement le niveau de tolérance aux pratiques corruptives de la part de la population et à sous-estimer l’importance qu’elle accorde aux questions de « bonne gouvernance ». Ces résultats plaident en faveur d’un usage plus précautionneux et raisonné des indicateurs globaux de gouvernance et confirment la nécessité de les compléter par des enquêtes auprès des acteurs concernés.
    Keywords: Corruption, Governance, Perception, Subsaharan Africa, Experts surveys, Household surveys, Corruption, Gouvernance, Perception, Afrique sub-saharienne, Enquêtes-experts,Enquêtes-ménages
    JEL: C89 C42 D73 O19
    Date: 2006–11
  17. By: Olivier Bochet; Talbot Page; Louis Putterman
    Date: 2005
  18. By: Daniela Del Boca (University of Turin); Silvia Pasqua (University of Turin); Chiara Pronzato (Institute for Social and Economic Research)
    Abstract: In this paper, we aim to explore the impact of social policies and labour market characteristics on the woman’s joint decisions of working and having children, using data from the European Community Household Panel (ECHP). We include in the analysis, beyond personal characteristics, variables related to the childcare system, parental leave arrangements, and labour market flexibility. Results show that a non negligible portion of the differences in participation and fertility rates across women from different European countries can be attributed to the characteristics of these institutions.
    Keywords: employment, europe, fertility
    Date: 2006–11
  19. By: Thomas Siedler (Institute for Social and Economic Research)
    Abstract: Recent years have witnessed a rise in right-wing extremism among German youth and young adults. This paper investigates the extent to which the experience of parental unemployment during childhood affects young people’s far right-wing attitudes and xenophobia. Estimates from three different German data sets show a positive relationship between growing up with unemployed parents and right-wing extremism, with xenophobia in particular. This paper uses differences in unemployment levels between East and West Germany, both before and after reunification, to investigate a causal relationship. Instrumental variables estimates suggest strong and significant effects of parental unemployment on right-wing extremism. This is consistent with classical theories of economic interest and voting behaviour which predict that persons who develop feelings of economic insecurity are more susceptible to right-wing extremism and anti-foreign sentiments.
    Date: 2006–11
  20. By: Robert I. Mochrie; John W. Sawkins; Alexander Naumov
    Abstract: In 1885, the largest churches in Scotland were engaged in a dispute about state funding. We use data generated in the course of that dispute to examine the standard economics of religion hypothesis that higher levels of competition in 1032 local markets for religious services, proxied by the number of denominations active in each, were associated with higher religious affiliation, proxied by measures of attendance and voluntary congregational giving. Adapting the complexity order approach of Montgomery (2003), we find evidence that is congruent with the hypothesis. However, we contend that the evidence is better explained by an alternative proposition that, given the particular institutional structure of markets and denominations at this time, market complexity does not decline with increasing market size
    Keywords: Competition, institutional structure, Presbyterian, Scotland
    JEL: L88 N93
    Date: 2006
  21. By: Ron A. Boschma; Koen Frenken
    Abstract: This paper is written as the first chapter of an edited volume on evolutionary economics and economic geography (Frenken, K., editor, Applied Evolutionary Economics and Economic Geography, Cheltenham: Edward Elgar, expected publication date February 2007). The paper reviews empirical applications of evolutionary economics in the field of economic geography. The review is divided in four parts: the micro-level of the firm, the meso-levels of industry and network, and the macro-level of spatial system. Some remarks on evolutionary policy in regional development are added as well as a short discussion of empirical problems that remain.
    Date: 2006
  22. By: Arhan Ertan; Talbot Page; Louis Putterman
    Date: 2005
  23. By: Jakub Steiner
    Abstract: This paper studies the enforcement abilities of authorities with a limited commitment to punishing violators. Commitment of resources su±cient to punish only one agent is needed to enforce high compliance of an arbitrary number of agents. Though existence of other, non-compliance equilibria is generally inevitable, there exist punishment rules suitable for a limited authority to assure that compliance prevails in the long run under stochastic evolution.
    Keywords: Commitment, Enforcement, Punishment, Stochastic Evolution.
    JEL: C73 D64 H41
  24. By: Amparo Castello-Climent (Institute of International Economics, University of Valencia); Rafael Domenech (Institute of International Economics, University of Valencia)
    Abstract: This paper presents a model in which inequality affects per capita income when individuals decide to invest in education taking into account their life expectancy, which depends to a large extent on the human capital of their parents. Our results show the existence of multiple steady states depending on the initial distribution of education. The low steady state is a poverty trap in which children raised in poor families have low life expectancy and work as non-educated workers. The empirical evidence suggests that the life expectancy mechanism explains a major part of the relationship between inequality and human capital accumulation.
    Keywords: Life expectancy, human capital, inequality.
    JEL: J10 O10 O40
    Date: 2006–09
  25. By: Paul R. Gregory (University of Houston and Hoover Institution, Stanford University); Philipp J.H. Schr oder (Aarhus School of Business, Denmark); Konstantin Sonin (CEFIR/NES)
    Abstract: This paper sheds light on dictatorial behavior as exemplified by the mass terror campaigns of Stalin. Dictatorships – unlike democracies where politicians choose platforms in view of voter preferences – may attempt to trim their constituency and thus ensure regime survival via the large scale elimination of citizens. We formalize this idea in a simple model and use it to examine Stalin’s three large scale terror campaigns with data from the NKVD state archives that are accessible after more than 60 years of secrecy. Our model traces the stylized facts of Stalin’s terror and identifies parameters such as the ability to correctly identify regime enemies, the actual or perceived number of enemies in the population, and how secure the dictators power base is, as crucial for the patterns and scale of repression.
    Keywords: Dictatorial systems, Stalinism, Soviet State and Party archives, NKVD, OPGU,Repression
    JEL: P00 N44 P26
    Date: 2006–11
  26. By: Eva Boxenbaum; Jean-Pascal Gond
    Abstract: This paper examines how individuals select and mobilize local institutions when they transfer business practices across societies that are construed as dissimilar to one another. We investigate empirically how the American business practice of socially responsible investment (SRI) was transferred to France and Quebec. Our analysis identifies five micro-strategies that were employed to contextualize SRI, namely filtering, rerouting, stowing, defusing, and coupling. This repertoire of micro-strategies extends previous research on contextualization, translation, and institutional transfers and links them to one another. They may also help explain why some transfers succeed while others fail.
    Keywords: Contextualization; transfer; translation; institutional theory; socially responsible investment
    Date: 2006

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