nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2007‒01‒14
28 papers chosen by
Fabio Sabatini
Universita degli Studi di Roma, La Sapienza

  1. Signalling in Social Networks: An Empirical Study of Denominational Fractionalization in the USA By Mehmet Karacuka; Martin Leroch
  2. The limits of self-governance in the presence of spite: Experimental evidence from urban and rural Russia By Simon Gaechter; Benedikt Herrmann
  3. Emotions Enforce Fairness Norms (a Simple Model of Strong Reciprocity) By López-Pérez, Raúl
  4. Family and Landed Property Relations Regarded As a Social Capital By Nikolaos Triantafyllopoulos
  5. Collective Action-A Challenge and an Opportunity for Water Governance By Maria Manuela Castro Silva
  6. NGOs and the search for Chinese civil society environmental non-governmental organisations in the Nujiang campaign By Büsgen, Michael
  7. Do Different Types of Innovation Require Specific Kinds of Knowledge Links? By Franz Toedtling; Patrick Lehner
  8. Social Interaction in Regional Labour Markets By Joerg Lingens; Joerg Heining
  9. Innovation Networks in the Learning Economy By Mercy Escalante-Ludena
  10. Neighborhood Effects, Public Housing and Unemployment in France By Claire Dujardin; Florence Goffette-Nagot
  11. The Roadblock of Culturalist Economics: Economic Change á la Douglass North By Khalil, Elias
  12. Determinants of University Spin-Offs’ Growth: Do Socioeconomic Networks and Support Matter? By Danny Soetanto; Marina van Geenhuizen
  13. Does Ethnic Capital Matter? Identifying the Role of Ethnic Peer Effects in the Intergenerational Transmission of Ethnic Differentials By Alexis León
  14. Experiments with Network Formation By John Duffy; Dean Corbae
  15. Networks Within Cities and Among Cities: A Paradigm for Urban Development and Governance By Tomaso Pompili
  16. The Geographical and Institutional Proximity of Scientific Collaboration Networks By Frank Van Oort; Roderik Ponds; Koen Frenken
  17. Common roots, shared traits, joint prospects? On the articulation of multiple modernities in Benin and Haiti By Kohnert, Dirk
  18. The Framing of Games and the Psychology of Strategic Choice By Martin Dufwenberg; Simon Gaechter; Heike Hennig-Schmidt
  19. AN EXPERIMENTAL ANALYSIS OF CONDITIONAL COOPERATION By Rachel Croson; Enrique Fatas; Tibor Neugebauer
  20. On the Articulation of Witchcraft and Modes of Production among the Nupe, Northern Nigeria By Kohnert, Dirk
  21. The Effects of (Incentivized) Belief Elicitation in Public Good Experiments By Simon Gaechter; Elke Renner
  22. Communication and Coordination in the Laboratory Collective Resistance Game By Cason, Timothy N.; Mui, Vai-Lam
  23. Private-Collective Innovation and the Fragility of Knowledge Sharing By Simon Gaechter; Georg von Krogh; Stefan Haefliger
  24. Economic Networks and Urban Complementarities in the Dutch Randstad Region By Otto Raspe; Frank Van Oort; Martijn Burger
  25. Internet Peering as a Network of Relations By Steffen Lippert; Giancarlo Spagnolo
  26. Relational Contracts and Inequity Aversion By Jenny Kragl; Julia Schmid
  27. The Roles of Temptation and Social Security in Explaining Individual Behavior By Alessandro Bucciol
  28. Education and crime: evidence from Italian regions By Paolo Buonanno; Leone Leonida

  1. By: Mehmet Karacuka; Martin Leroch (Department of Economics, Ege University)
    Abstract: An economic signalling model contributing to the explanation of religious schism is presented. Religious groups are interpreted as a device for exchanging information about and via others. Two effects result. First, the larger the network, the worse the signal quality one receives of the type of other members. Second, the larger a network, the more potentially valuable information is available. A modernizing economy is characterized by increasing overall transaction costs. Economizing on transaction costs by splitting from existing groups, and therefore increasing the signal value, could bear an economic advantage. Supporting empirical data are presented. In our view, our findings also contribute to the explanation of the so-called Kelley Thesis, stating that religious movements with stricter enforcement of their behavioural norms are growing in size, while such with rather liberal attitudes toward their norm enforcement face a loss of members. Supporting historical and empirical results are presented.
    Keywords: Kelley Thesis, Religion, Religious Groups, Schism, Signalling, Social Capital, Fractionalization
    JEL: N20 O17 R12 R15 Z12 Z13
    Date: 2006–12
  2. By: Simon Gaechter (University of Nottingham); Benedikt Herrmann (University of Nottingham)
    Abstract: We report evidence from public goods experiments with and without punishment which we conducted in Russia with 566 urban and rural participants of young and mature age cohorts. Russia is interesting for studying voluntary cooperation because of its long history of collectivism, and a huge urban-rural gap. In contrast to previous experiments we find no cooperation-enhancing effect of punishment. An important reason is that there is substantial spiteful punishment of high contributors in all four subject pools. Thus, spite undermines the scope for self-governance in the sense of high levels of voluntary cooperation that are sustained by sanctioning free riders only.
    Keywords: social norms, free riding, punishment, spite, experiments
    JEL: H41 C91 D23 C72
    Date: 2006–07
  3. By: López-Pérez, Raúl (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.)
    Abstract: In experimental games, many subjects cooperate contrary to their material interest and they do that in a reciprocal manner. In addition, many subjects punish those others who behave unkindly, and previous history usually influences subjects’ choices. We propose a simple game-theoretical model to account for these and other experimental phenomena, and compare it with other models of social preferences and reciprocity.
    Keywords: Emotions; Fairness; Path-Dependency; Strong Reciprocity; Social Norms
    JEL: C70 C72 D63 D64 D74 Z13
  4. By: Nikolaos Triantafyllopoulos
    Abstract: Putnam states that ‘the most fundamental form of social capital is the family.’ Bourdieu sees the family as the main site of accumulation and transmission of social capital, while Newton states that ‘the family may also be the most fundamental source of social capital.’ Social capital literature tends to emphasize the role of families in constructing social capital, be this within family networks or beyond in community networks. This paper aims at identifying ways to link exclusive forms of indigenous social capital such as land property, to more inclusive forms of social capital that integrate families and communities in a global process of development. This paper focuses on the role of family landed property in the creation of social networks leading to local development. The case study is of the Faliraki tourist community on the island of Rhodes, Greece. Available primary data refer to a 393-plot sample of cadastral histories and cover a 30-year period, from 1965 to 1995, when the transition from a rural area to an area established as tourist resort in the international market took place. A non-market transfer acts study (inheritances, donations and dowries) has revealed family property management practices and customary rules. One may observe a widespread phenomenon of social dispersion of land property amongst a great number of individuals and families, favoring the spontaneous creation of social networks on different levels and have supported – to a high degree – family businesses and local tourism development. Rather than viewing family businesses as rational decision-makers, the social capital approach of this paper suggests that family businesses and local development are embedded in social relations that influence their activities. Social capital may be the ‘missing link’ in development, as a complement and catalyst of the other, better-known species of capital.
    Date: 2006–08
  5. By: Maria Manuela Castro Silva
    Abstract: This paper addresses the motivations that drive participation in groups concerning water protection and provides a review of the key role collective action plays in accessing and managing water resources. It also analyses the conditions and factors which make such organizations effective in solving shared problems and in faciliting and institutionalizing negotiation platforms. Collective action heavily relies on the social capital existing in a community to accomplish goals and objectives. These social networks allow for flow of information, serving not only to criticize but also to purpose a different course in environmental and particularly, water management. The vital role of collective action and other "major groups" in sustainable development was recognized in Chapter 27[2] of Agenda 21, leading to revised arrangements for consultative relationship between the United Nations and non-governmental organizations which are, indeed, collective voluntary action. The coalition building capacity suggesting the mobilization of civil society in the sense of organized interests can supplement the ultimate responsibility of the traditional democratic institutions according to the implementation of the Aarthus Principles. Modern governance calls for consensus, seeking processes with organized interests, a good culture of consultation and participation. Collective action meets these goals, as offers the chances for environmental effectiveness, contributing to information generation and creation of relevant knowledge. These factors may relieve the legislator, affecting the way in which powers are exercised at European level, particularly as regards the five principles of good governance, namely openness, participation, accountability, effectiveness and coherence. Most problems with water resource management are felt at the lowest levels and changes in water management are required down to the individual action, reasons why the development strategies call for extensive pro-active participation (at different levels, sectors and scales) upholding the principles of subsidiarity. Finally, this paper also highlights the role performed by collective action in increasing advocacy skills and capacity, contributing to strengthening governance at the local level through favoring the enabling environment for water protection and conservation.
    Date: 2006–08
  6. By: Büsgen, Michael
    Keywords: voluntary organizations; nonprofit organizations; grass roots groups; environmentalism; civil society; advocacy; China;
    Date: 2006
  7. By: Franz Toedtling; Patrick Lehner
    Abstract: Innovations are increasingly seen as result of an interactive process of knowledge generation and knowledge application. According to the innovation systems model the business sector, the science sector, and policy actors are involved in this process. What is often neglected in existing literature is the aspect that different kinds of innovation may require specific types of relations. Radical innovations often draw on new scientific knowledge generated in universities and research organizations. The exchange of this type of knowledge requires intensive personal interactions and thus might favor local / regional levels over others. Incremental innovations on the other hand are often taking place in interaction with customers and suppliers which are often located at higher spatial levels beyond the region. In the present paper we will analyze the relationship between the different kinds of innovation and the respective knowledge links – characterized by the type and location of innovation partners as well as by the mode of knowledge exchange. Preliminary results show that firms introducing products new to the market are relying to a higher degree on patents and they are cooperating with universities and research institutes. Hereby, researchers seem to exert a bridging function between the business and the science sector. The mode of knowledge exchange seems to be also influenced by location. Knowledge between geographically close science and industry partners is exchanged through cooperation, whereas over longer distances knowledge is more often acquired by contract research.
    Date: 2006–08
  8. By: Joerg Lingens; Joerg Heining
    Abstract: Social interaction, i.e. the interdependence of agents' behaviour via non-market activities, has recently become the focus of economic analysis. Social interaction has been used to explain various labour market outcomes. An important result arising from the literature is the proposition that labour markets are characterised by multiple equilibria. Thus, social interaction is used as an explanation for regional unemployment disparities. Building on this, we construct a Pissarides (2000) type search model with social interaction. Despite social interaction, this type of model is characterised by only one stable equilibrium. Using a unique data set on un-/employment spell data for Germany we analyse whether multiple equilibria in regional labour markets exist. After controlling for structural differences we are able to show that the data supports the assumption of a unique equilibrium. As such, social interaction cannot explain regional unemployment disparities.
    Date: 2006–08
  9. By: Mercy Escalante-Ludena
    Abstract: This paper presents breakthroughs of the proposal for a methodology to develop innovation networks with virtual links. It considers stages of analysis, design, implementation and follow up and can be applied to both large companies and SMEs. Fragmented approaches have predominance in literature, for this reason we want to close that gap somehow, within the framework of a systemic, dynamic, organic, and transparent approach. The methodology values the already existing contributions, from which new elements have been added, specially the support of electronic networks (ICT). We consider that innovation in networks must transcend spatial frontiers, thus considering virtual links since they turn the organizations faster and more flexible, therefore facilitating a more efficient access to information and knowledge; considered the key aspects in today’s interactive innovation process. The research methodology was bibliographical, documental, and exploratory.
    Date: 2006–08
  10. By: Claire Dujardin; Florence Goffette-Nagot
    Abstract: This paper is aimed to examine how individual unemployment is influenced both by location in a deprived neighborhood and public housing. Of course, measuring neighborhood effects raises the issue of location choice endogeneity, which generates correlated effects (Moffitt, 2001; Durlauf, 2004). Indeed, individuals with similar socio-economic characteristics, labor-market outcomes, and unobservable traits tend to sort themselves into certain parts of the urban space. In this paper, we investigate the possibility to deal with endogeneity of location choices by means of a non-linear model, that offers conditions under which group effects may be identified (Brock, Durlauf, 2003 and 2004). Specifically, in a preliminary data analysis step, we classify neighborhoods as deprived or not deprived and then estimate a simultaneous probit model of (i) public housing accommodation, (ii) type of neighborhood, and (iii) unemployment, allowing for non-zero correlations between the error terms of the three equations. The large share of public housing units in France and their concentration in poor neighborhoods, where they may represent as much as two thirds of housing units, allow us to use public housing accommodation as a powerful determinant of location in these neighborhoods. Estimations of this simultaneous probit model by simulated maximum likelihood are performed on a sample of approximately 10,000 individuals, taken from the 1999 French Census and representing about five percents of households' heads participating in the labor-market in Lyon, the third largest city in France. Our results show that public housing does not have any direct effect on unemployment. However, living within the 35% more deprived neighborhoods does increase the unemployment probability significantly. Our estimate is comparable to that Topa (2001) obtained for Chicago. As expected, the effect of neighborhood substantially decreases when dealing with the endogeneity of neighborhood and when using public housing as a determinant of neighborhood choice.
    Date: 2006–08
  11. By: Khalil, Elias
    Abstract: In his 2005 book, Understanding the Process of Economic Change, North offers a rough account of economic change that can be called “culturalist economics.” In his account, he attributes the change of well being of individuals to, besides technology and demographics, cultural heritage or cultural beliefs. Using this basis, he then attributes "the mystery of the unique evolution of western Europe" to a causative view that combines "Christian dogma" and English "individualism." This combinatory belief assures property rights, and hence explains the success of Western Europe and the US and the failure of Islam and Latin America in terms of their respective economic development. But North’s culturalist economics faces a roadblock: it does not explain the origin of beliefs, and it neglects the role of rational choice in manufacturing beliefs. Specifically, it ignores the roles of agency, revolutionary change, and the dynamics of empire.
    Keywords: cultural economics vs. culturalist economics; reification of culture; Christian dogma; individualism; mystery of rise of Europe; Islam.
    JEL: Z1 N01 B52 N0 B40
    Date: 2006–12–05
  12. By: Danny Soetanto; Marina van Geenhuizen
    Abstract: University spin-offs (USOs), as a type of entrepreneurial firms, face the challenge of obtaining sufficient resources to realize perceived business opportunities. USOs are vulnerable to many obstacles in this endeavor, particularly obstacles related to a lack of entrepreneurial knowledge (skills). Support such as office facilities, loan, and business coaching provided by incubator organizations, may help USOs to overcome obstacles. On the other hand, USOs may also overcome the lack of resources by participating in networks of supportive relationships. Social networking by USOs, including its spatial dimension, is not well understood. For instance, it is still not known how universities as a main source of knowledge contribute to the knowledge needs of nearby USOs; similarly, the spatial layout of knowledge relations of USOs has remained virtually unknown. This paper attempts to fill this knowledge gap. Our conceptual model of early growth of USOs, in terms of knowledge needs and fulfilment, is based on resource-based theory and social network theory. In this paper, we assume that USOs’ embeddedness in a network of ties is an important source of variation in the acquisition of knowledge resources. We argue that, aside from support from incubation organizations, USOs that maintain networks rich in bridging or boundary-spanning ties with knowledge institutions/actors are better-off compared with USOs that don’t employ such ties. We focus on the role of local institutions, particularly the university, as a source of knowledge. Our assumptions are tested on the basis of a sample of academic spin-offs of TU Delft, the Netherlands. The results from regression modeling are expected to support the embeddedness hypothesis and to produce new insights about the link between USOs’ social networks, the acquisition of knowledge and survival and growth.
    Date: 2006–08
  13. By: Alexis León
    Abstract: . . .
    Date: 2006–12
  14. By: John Duffy; Dean Corbae
    Abstract: We examine how groups of agents form trading networks in the presence of idiosyncratic risk and the possibility of contagion. Specifically` four agents play a two--stage finite repeated game. In the first stage` the network structure is endogenously determined through a noncooperative proposal game. In the second stage` agents play multiple rounds of a coordination game against all of their chosen `neighbors\` after the realization of a payoff relevant shock. While parsimonious` our four agent environment is rich enough to capture all of the important interaction structures that have appeared in the networks literature` including bilateral (marriage)` local interaction (wheel)` star` and uniform matching (complete) networks. Marriage is not only the ex-ante efficient network in our environment` but also stable in the sense of being immune to unilateral deviations. Since our framework admits multiple equilibria` we examine which types of networks are likely to emerge through a series of experiments. Our experimental findings largely confirm the predictions of our model.
    Date: 2006–12
  15. By: Tomaso Pompili
    Abstract: Networks and networking have become fashionable concepts and terms in regional science, and in particular in regional and urban geography in the last decade: we speak about network firms, network society, network economy but also network cities, city-networks, reti urbane, reseaux de villes. Only catch-words for somebody; a true new scientific paradigm according to others. Our opinion is that in fact we are confronted with a new paradigm in spatial sciences, under some precise conditions: - that its exact meaning is thoroughly defined, - that its theoretical economic rationale is justified, - that the novelty of its empirical content is clearly pointed out, with respect to more traditional spatial facts and processes that can easily be interpreted through existing spatial paradigms. The relevant theoretical building block on which the network concept or paradigm may be constructed are: - a new view of the economy as a system or web of links between individuals, firms and institutions, where links depend on experience and evolve through learning processes; the existing endowment of knowledge and other production factors is put into value through a relational capability addressed towards the exchange and collection of information, building reputation and trust, creating synergies, cutting down uncertainty, boosting learning processes; - the acknowledgement of cooperation as a new organisational and behavioural form, intermediate between hierarchy (internal development and merging of external activities through direct control) and market resort; cooperation networks among firms collaborating with each other on technological advances and innovation projects were the earlier phenomena that were abundantly explored in the past. In a spatial perspective, two phenomena in particular are worth exploring today through the network concept: - networking as cooperation among individuals, firms and institutions taking place inside the cities concerning collective action, public/private partnerships on large urban projects and the supply of public goods, and giving rise to new forms of urban governance; - networking as inter-urban cooperation, assuming the cities as economic actors, competing but also cooperating in the global arena where locations of internationally mobile factors (professionals, corporations, institutions) are decided and negotiated. The paper is organised in the following way: - a major section is devoted to the interpretation of the micro-economic efficiency of local networking (local urban networks), in terms of the usual criteria of optimal allocation of resources and collective welfare, viewing the network as an organisational alternative between market failure and state failure; - a transition section deals with the interpretation of cities, a collective actor at best, as individual/unitary economic actors, given the case for collective action among interest groups, the possibility of defining in broad terms a function of collective preference referring to non-mobile local actors, the engagement of public and private actors in processes of strategic planning and definition of shared visions for the future of the city vis-a-vis mobile actors; - another main section interprets competition and cooperation among cities (inter-city-networks) underlining advantages, risks and conditions for maximising overall comprehensive well-being. JEL classification: D70, H77, R58
    Date: 2006–08
  16. By: Frank Van Oort; Roderik Ponds; Koen Frenken
    Abstract: The geography of innovation has established itself as a central subject in economic geography. Geographical proximity to firms and organizations like universities is supposed to have a positive effect on a firms’ innovative performance. One of the reasons causing these positive agglomeration effects is the fact that collaboration is eased by geographical proximity. Although the role of proximity for collaboration is a well researched theme with regard to innovation, less is known about the role of proximity in scientific collaboration and how this affects the probability and nature of networking among research institutions. This is surprising given the fact that collaboration in science has become a central policy issue. In this paper we set out a number of theoretical considerations about the role of geography for innovation and see whether these apply for science as well. The empirical part will focus on the geography of collaboration in scientific knowledge production, testing the hypothesis that collaboration between different kinds of organizations is geographically more localized than collaboration between the same kinds of organizations due to institutional or organizational proximity. Besides this we will analyze the importance of spatial proximity for various forms of collaboration (such as university-university and university-firm collaboration) using the concept of the gravity model. Finally we will look at the spatial structure of these collaboration networks using insights from social network methodology. Based on co-publications, central nodes of collaborative interaction and network structures are analysed over time. On the network-level we conclude on differences in the fields of life- and physical sciences and on differences on the type of relations according to university-firm, university-university and university-governmental institution linkages. On the regional level we conclude on the centrality and spatial extent of scientific collaboration hubs over time
    Date: 2006–08
  17. By: Kohnert, Dirk
    Abstract: The globalized Western culture of innovation, as propagated by major aid institutions, does not necessarily lead to empowerment or improvement of the well-being of the stakeholders. On the contrary, it often blocks viable indigenous innovation cultures. In African societies and African Diasporas in Latin America, Cultures of Innovation largely accrue from the informal, not the formal sector. Crucial for a proper understanding is its structural differentiation according to class, gender or religion, and between different trans-national social spaces. Different innovation cultures may be complementary, mutually reinforcing, or conflicting, leading in extreme cases even to a 'clash of cultures' at the local level. The repercussions of competing, even antagonistic agencies of innovative strategic groups are demonstrated, taking the example of the impact of African religion on development in Benin and Haiti.
    Keywords: economic development; cultural change; religion; social structure; Benin; Haiti;
    JEL: Z1 Z12 O31 N36 E26 Z13 O55 O57
    Date: 2006
  18. By: Martin Dufwenberg (University of Arizona); Simon Gaechter (University of Nottingham); Heike Hennig-Schmidt (University of Bonn)
    Abstract: Psychological game theory can provide a rational choice explanation of framing effects; frames influence beliefs, and beliefs influence motivations. We explain this point theoretically, and explore its empirical relevance experimentally. In a 2×2-factorial framing design of one-shot public good experiments we show that frames affect subject’s first- and second-order beliefs, and contributions. From a psychological game-theoretic framework we derive two mutually compatible hypotheses about guilt aversion and reciprocity under which contributions are related to second- and first-order beliefs, respectively. Our results are consistent with either.
    Keywords: Framing; psychological games; guilt aversion; reciprocity; public good games; voluntary cooperation
    JEL: C91 C72 D64 Z13
    Date: 2006–10
  19. By: Rachel Croson (University of Pennsylvania); Enrique Fatas (Universitat de València); Tibor Neugebauer (University Hannover)
    Abstract: Experimental and empirical evidence identifies the existence of socialpreferences and proposes competing models of such preferences. In this paper, wefurther examine one such social preference: conditional cooperation. We run threeexperimental public goods games, the traditional voluntary contribution mechanism(VCM, also called the linear public goods game), the weak-link mechanism (WLM) andthe best-shot mechanism (BSM). We then analyze the existence and types ofconditional cooperation observed. We find that participants are responsive to the pastcontributions of others in all three games, but are most responsive to differentcontributions in each game: the median in the VCM, the minimum in the WLM and themaximum in the BSM. We conclude by discussing implications of these differences forbehavior in these three mechanisms. This paper thus refines our notions of conditionalcooperation to allow for different types of public good production functions and byextension, other contexts.
    Keywords: experimental economics, conditional cooperation, public goods
    JEL: C72 C92 D44 H41
    Date: 2006–11
  20. By: Kohnert, Dirk
    Abstract: The article aims to provide better insight into the multiple facets of informal politics and covert social conflicts at the local level during the transformation of African states, using witchcraft accusations as an indicator and the Nupe of Northern Nigeria, as an example. A tentative long-term study on the growth of the Nupe state since pre-colonial times indicates a close relationship between the content and form of witchcraft accusations and the mode of production under which the stakeholders used to work. This paper is based on the author’s hitherto unpublished empirical material, which, although collected some twenty years ago, is not simply of historical value, but remains crucial in backing the major theses of the article. Over time, witchcraft accusations among the Nupe apparently served different, even antagonistic ends, depending on the mode of production in which they were embedded; these ranged from the defence of the village community against a flagrant violation of its social norms to the ruthless exploitation of the Nupe villages by their Fulani overlords. In the long run, however, the socio-economic impact of any form of witchcraft accusation undermines the very same mode of production on which it is based, thereby contributing to its own decline. Much of the continuing confusion in the literature on the apparent contradiction between “emancipating” and "oppressive" functions of witchcraft beliefs could be solved by considering this articulation between modes of production, witchcraft accusations, and the underlying vested interests of the ruling powers.
    Keywords: modes of production; informal politics; social conflicts; occult belief; Nupe; Northern Nigeria; Africa
    JEL: Z1 P16 N37 Z12 O17 Z13 O55
    Date: 2006
  21. By: Simon Gaechter (University of Nottingham); Elke Renner (University of Nottingham)
    Abstract: We investigate the impact of eliciting beliefs about the average contribution of other group members in finitely repeated public goods experiments. We find that belief accuracy is significantly higher when beliefs are incentivized. The distribution of beliefs as well as the relationship between contributions and beliefs are unaffected by incentives. Eliciting incentivized beliefs increases contribution levels relative to a benchmark treatment without belief elicitation, and significantly so in the latter half of the experiment. This result contradicts Croson (2000). We discuss the implications of our results for the design of experiments.
    Keywords: Incentives, beliefs, experiments, public goods
    JEL: C90
    Date: 2006–09
  22. By: Cason, Timothy N.; Mui, Vai-Lam
    Abstract: This paper presents a laboratory collective resistance (CR) game to study how different forms of non-binding communication among responders can help coordinate their collective resistance against a leader who transgresses against them. Contrary to the predictions of analysis based on purely self-regarding preferences, we find that non-binding communication about intended resistance increases the incidence of no transgression even in the one-shot laboratory CR game. In particular, we find that the incidence of no transgression increases from 7 percent with no communication up to 25-37 percent depending on whether communication occurs before or after the leader’s transgression decision. Responders’ messages are different when the leaders can observe them, and the leaders use the observed messages to target specific responders for transgression.
    Keywords: Communication ; Cheap Talk ; Collective Resistance ; Laboratory Experiment ; Social Preferences
    JEL: C92 D74
    Date: 2006–11
  23. By: Simon Gaechter (University of Nottingham); Georg von Krogh (ETH Zurich); Stefan Haefliger (ETH Zurich)
    Abstract: Incentives to innovate is a central element of innovation theory. In the private-investment model, innovators privately fund innovation and then use intellectual property protection mechanisms to appropriate returns from these investments. In the collective-action model, public subsidy funds public goods innovations, characterized by non-rivalry and non-exclusivity. Recently, these models have been compounded in the privatecollective innovation model where innovators privately fund public goods innovations (von Hippel and von Krogh, 2003). Private-collective innovation can be illustrated in the case of open source software development. The current paper contributes to the work on private-collective innovation by investigating incentives that motivate innovators to share their knowledge in an initial situation devoid of community activity. We use game theory to predict knowledge sharing behavior, and test these predictions in a laboratory setting. The results show that knowledge sharing is a coordination game with multiple equilibria, reflecting the fragility of knowledge sharing between innovators with conflicting interests. The experimental results demonstrate important asymmetries in the fragility of knowledge sharing and, in some situations, much more knowledge sharing than theoretically predicted. A behavioral analysis suggests that knowledge sharing is not only affected by the material incentives, but also by social preferences. The results offer general insights into the relationship between incentives and knowledge sharing and contribute to a better understanding of the inception of privatecollective innovation.
    Keywords: innovation, private-collective innovation model, knowledge sharing, incentive, open source software, experimental economics, game theory
    Date: 2006–10
  24. By: Otto Raspe; Frank Van Oort; Martijn Burger
    Abstract: In this paper we analyze the regional embeddedness of firm’s networks in Dutch regions. Theorizing on urban economic networks is an important issue in the urban economic growth literature (Batten 1995, Hess 2004). For this, 2000 firms in basic sectors (industrial, business-services and wholesale) provided information on their ten most important relationships with other firms in terms of turnover. Besides the relations themselves, the type of relations (standardized, customized or joint-venture), the frequency of relations, the sectoral composition and the exact destination of relations are known. These aspects are used to create subsamples that are analyzed. We draw conclusions of the shares of intra-urban relations, intra-region relations, national relations and international relations. Aggregated to the municipal level, we test for the central place hypothesis of firms’ subcontracting and delivering relations as opposed to the network hypothesis of multinodality, in six regions in the Netherlands. Conclusions on the importance of both paradigms are drawn and related to recent policy initiatives that aim at urban network development. Batten, D. (1995), “Network cities: creative urban agglomerations for the 21st Centuryâ€. In: Urban Studies 32, pp. 313-327. Hess, M. (2004), “Spatial relationships? Towards a reconceptualization of embeddedness†In: Progress in Human Geography 28, pp. 165-186.
    Date: 2006–08
  25. By: Steffen Lippert (Massey University, Department of Commerce, PB 102 904, NSMC, Auckland, New Zealand. Tel. +64 9 414 0800 Ext. 9283.; Giancarlo Spagnolo (Stockholm School of Economics, Department of Economics, P.O. Box 6501, SE–113 83 Stockholm, Sweden, and Consip Research Unit, Via Isonzo, 19/E, I–00198 Rome, Italy. Tel +39 320 431 2186.
    Abstract: We apply results from recent theoretical work on networks of relations to analyze optimal peering strategies for asymmetric ISPs. It is shown that - from a network of relations perspective – ISPs’ asymmetry in bilateral peering agreements need not be a problem, since when these form a closed network, asymmetries are pooled and information transmission is faster. Both these effects reduce the incentives for opportunism in general, and interconnection quality degradation in particular. We also explain why bilateral monetary transfers between asymmetric ISPs (Bilateral Paid Peering), though potentially good for bilateral peering, may have rather negative effects on the sustainability of the overall peering network.
    Date: 2006–11
  26. By: Jenny Kragl; Julia Schmid
    Abstract: We study the effects of envy on the feasibility of relational contracts in a standard moral hazard setup with two agents. Performance is evaluated via an observable, but non-contractible signal which reflects the agent´s individual contribution to firm value. Both agents exhibit disadvantageous inequity aversion. In contrast to the literature, we find that inequity aversion may be beneficial: In the presence of envy, for a certain range of interest rates relational contracts may be more profitable. Furthermore, for some interest rates reputational equilibria exist only with inequity averse agents.
    Keywords: Principal-Agent, Relational Contract, Inequity Aversion, Envy
    JEL: D63 D82 M52 M54
    Date: 2006–12
  27. By: Alessandro Bucciol (University of Padua)
    Abstract: I simulate a life-cycle model with preferences described by a utility function a' la Gul and Pesendorfer (2001). I show that temptation to consume contributes to explain the saving, retirement consumption, and asset allocation puzzles. I perform two analyses, with and without Social Security protection, separately for the US and Italy. The pension replacement rate is endogenous in the model and varies with income realizations. The results also show that the optimal behavior differs remarkably between the two countries when Social Security is considered. In particular, the more generous Italian system depresses savings and investments of more tempted individuals.
    JEL: D91 E21 G11
    Date: 2006–12
  28. By: Paolo Buonanno (Department of Economics, University of Bergamo); Leone Leonida (Department of Economics, Queen Mary University of London)
    Abstract: This paper studies the impact of education on criminal activity in Italy. We propose a theoretical framework to determine the effects of education and past incidence of crime on criminal activity, and we test its predictions using annual data for the twenty Italian regions over the period 1980-1995. The results show that education is negatively correlated with delinquency and that crime rates display persistence over time. Our results are robust to model specifications and endogeneity.
    Keywords: Crime; Education; Panel Data
    JEL: I2 J24 K42
    Date: 2005–06

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