nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2007‒03‒10
24 papers chosen by
Fabio Sabatini
University of Rome, La Sapienza

  1. When in Rome, do as the Romans do: the coevolution of altruistic punishment, conformist learning, and cooperation By Guzmán, Ricardo Andrés; Rodríguez-Sickert, Carlos; Rowthorn, Robert
  2. Trust and reciprocity in incentive contracting By Rigdon, Mary
  3. The waning and restoration of social norms: a formal model of the dynamics of norm compliance and norm violation By Paul T. de Beer; Robert H.J. Mosch
  4. Le opinioni degli italiani sull’evasione fiscale (The Opinion of Italians on Tax Evasion) By Cannari Luigi; D'Alessio Giovanni
  5. Poverty in Rural India: Ethnicity and Caste By Ira N. Gang; Kunal Sen; Myeong-Su Yun
  6. Dynamic Models of Segregation in Small-World Networks By Giorgio Fagiolo; Marco Valente; Nicolaas J. Vriend
  7. The Relation between Democracy and Religion: Towards a European Discursive Model? By Camil Ungureanu
  8. Asessing public policies. The case of education in Europe and the interaction between personal and institutional factors By Anna Cuxart; Clara Riba
  9. Political Rents in a Non-Corrupt Democracy By Svaleryd, Helena; Vlachos, Jonas
  10. Information, Reputation and Ethnic Conflict By Dominic Rohner
  11. Migrants, Ethnicity and Strategic Assimilation By Gil S. Epstein; Ira N Gang
  12. Who Joins Ethnic Militias? A Survey of the Oodua People’s Congress in South western Nigeria By Yvan Guichaoua
  13. The impact of neighbourhood on the income and mental health of British social renters By Carol Propper; Simon Burgess; Anne Bolster; George Leckie; Kelvyn Jones; Ron Johnston
  14. Social Memory and Evidence from the Past By Luca Anderlini; Dino Gerardi; Roger Lagunoff
  15. Self-selection patterns in Mexico-U.S. migration: The role of migration networks By David McKenzie; Hillel Rapoport
  16. The interaction of ownership structure and customer satisfaction as determinants of brand equity By Anna Torres; Josep A. Tribó
  17. Two Views on Institutions and Development: The Grand Transition vs. the Primacy of Institutions By Martin Paldam; Erich Gundlach
  18. Social Interaction Effects in Disability Pension Participation. Evidence from Plant Downsizing By Mari Rege, Kjetil Telle and Mark Votruba
  19. Boosting Estimation of RBF Neural Networks for Dependent Data By George Kapetanios; Andrew P. Blake
  20. Sustaining cooperation in trust games By Rigdon, Mary; McCabe, Kevin; Smith, Vernon
  21. Neighborhood effects, public housing and unemployment in France By Florence Goffette-Nagot; Claire Dujardin
  22. Efficiency in the Trust Game: an Experimental Study of Preplay Contracting By Juergen Bracht; Nick Feltovich
  23. Organisational Structure, Communication and Group Ethics By Matthew Ellman; Paul Pezanis-Christou
  24. Knowledge diffusion from university and public research. A comparison between US, Japan and Europe using patent citations. By Emanuele Bacchiocchi; Fabio Montobbio

  1. By: Guzmán, Ricardo Andrés; Rodríguez-Sickert, Carlos; Rowthorn, Robert
    Abstract: We model the coevolution of behavioral strategies and social learning rules in the context of a cooperative dilemma, a situation in which individuals must decide whether or not to subordinate their own interests to those of the group. There are two learning rules in our model, conformism and payoff-dependent imitation, which evolve by natural selection, and three behavioral strategies, cooperate, defect, and cooperate plus punish defectors, which evolve under the influence of the prevailing learning rules. Group and individual level selective pressures drive evolution. We also simulate our model for conditions that approximate those in which early hominids lived. We find that conformism can evolve when the only problem that individuals face is a cooperative dilemma, in which prosocial behavior is always costly to the individual. Furthermore, the presence of conformists dramatically increases the group size for which cooperation can be sustained. The results of our model are robust: they hold even when migration rates are high, and when conflict among groups is infrequent.
    Keywords: Evolution of behavior; Social learning; Cooperation; Conformism; Altruistic punishment; Public good games
    JEL: Z13 Z1 H41
    Date: 2006–04–06
  2. By: Rigdon, Mary
    Abstract: Principals can attempt to get agents to perform certain actions preferable to the principal by using ex post punishments or rewards to align incentives. Field data is mixed on whether, and to what extent, such informal incentive contracting (paradoxically) crowds out efficient solutions to the agency problem. This paper explores, via a novel set of laboratory experiments, the impact of ex post incentives on informal contracts between principals and agents in bargaining environments in which there are gains from exchange and when there is an opportunity for the principal to relay a no-cost demand of the division of those gains. Incentive contracting in these environments does not crowd-out off-equilibrium cooperation, and at high incentive levels cooperation is crowded in.
    Keywords: incentives; trust; reciprocity; organizations; experimental economics
    JEL: D01 D02 D00
    Date: 2005–05
  3. By: Paul T. de Beer; Robert H.J. Mosch
    Abstract: Recent debates about crime on the one hand and the purported deterioration of values and norms on the other hand implicitly refer to two kinds of coordination mechanisms. Crime is supposed to be a consequence of deficient material incentives in the form of detection and formal sanctions. Values and norms are related to immaterial incentives, such as feelings of shame or loss of reputation, originatingfrom informal social supervision, and by feelings of guilt or repentance, originating from the personal conviction that one ought to behave otherwise. In order to investigate the relationship between rising crime and other breaches of norms on the one hand and the deterioration of both material and immaterial incentives on the other hand, a simple rational choice model is developed. This model proves to be a useful framework for analyzing behavior in a context in which different incentives for individual behavior, i.e. individual self-interest, formal sanctions, internalized social norms and social norms that are enforced by external sanctions, play a role simultaneously. It is shown that the waning and restoration of norms are asymmetric processes in which the restoration of eroded norms involves a much larger effort than was needed to maintain the norms in the original situation.
    JEL: E31 E52 E58
    Date: 2007–02
  4. By: Cannari Luigi (Bank of Italy); D'Alessio Giovanni (Bank of Italy)
    Abstract: In this paper we use data from the Bank of Italy’s Survey on Household Income and Wealth (SHIW) to study what Italian households think of tax evasion, and to estimate their propensity to evade taxes. This propensity turns out to be larger for the self-employed than for employees; within the group of employees, the propensity is higher for blue-collar workers than for white-collars workers. The propensity decreases with both education and age; it is higher in provincial capitals with higher unemployment and crime rates, and where social capital and the quality of public services are lower. The aversion to tax evasion turns out to be quite low across all social classes; this result suggests that mechanisms of general reprobation have a modest role in hampering tax evasion. Comparing SHIW data with those collected through a similar survey carried out by the Ministry of Finance, we find that the propensity to evade taxes has increased from 1992 to 2004.
    Keywords: Tax evasion, Social norms, social capital
    JEL: H26 Z13
  5. By: Ira N. Gang (Rutgers University); Kunal Sen (University of Manchester); Myeong-Su Yun (Tulane University)
    Abstract: This paper analyzes the determinants of rural poverty in India, contrasting the situation of scheduled caste (SC) and scheduled tribe (ST) households with the non-scheduled population. The incidence of poverty in SC and ST households is much higher than among non-scheduled households. By combining regression estimates for the ratio of per capita expenditure to the poverty line and an Oaxaca-type decomposition analysis, we study how these differences in the incidence of poverty arise. We find that for SC households, differences in characteristics explain the gaps in poverty incidence more than differences in transformed regression coefficients. In contrast, for ST households, the transformed regression coefficients play the more important role.
    Keywords: poverty, caste, ethnicity, decomposition
    JEL: I32 O12 J15
    Date: 2006–12–01
  6. By: Giorgio Fagiolo (Sant’Anna School of Advanced Studies, Pisa); Marco Valente (University of L’Aquila); Nicolaas J. Vriend (Queen Mary, University of London)
    Abstract: Schelling (1969, 1971a,b, 1978) considered a simple proximity model of segregation where individual agents only care about the types of people living in their own local geographical neighborhood, the spatial structure being represented by one- or two-dimensional lattices. In this paper, we argue that segregation might occur not only in the geographical space, but also in social environments. Furthermore, recent empirical studies have documented that social interaction structures are well-described by small-world networks. We generalize Schelling’s model by allowing agents to interact in small-world networks instead of regular lattices. We study two alternative dynamic models where agents can decide to move either arbitrarily far away (global model) or are bound to choose an alternative location in their social neighborhood (local model). 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. Thus, Schelling’s original results seem to be robust to the structural properties of the network.
    Keywords: Spatial proximity model, Social segregation, Schelling, Proximity preferences, Social networks, Small worlds, Scale-free networks, Best-response dynamics
    JEL: C72 C73 D62
    Date: 2007–03
  7. By: Camil Ungureanu
    Abstract: In this paper we advance the argument that, under certain socio-political and cognitive conditions, the manifestation of religion in the opinion-oriented public spheres can have an inherent value for democratic life. However, it is only after processes of selective interpretation and transformation through inclusive discursive practices that religious semantic contents may legitimately influence decisional interpretations of constitutional principles and rights. This model draws on republicanism and deliberative democracy: given that these two conceptions do not start out from an abstract principle of liberty as non-interference but from a multidimensional conception of freedom embedded in various historical contexts of mutual recognition, they are more predisposed to provide conceptual resources for envisaging a discursive relation between democracy and religion.
    Keywords: democracy; fundamental/human rights
    Date: 2006–12–01
  8. By: Anna Cuxart; Clara Riba
    Abstract: The paper deals with the comparative study of European citizens’ satisfaction with the state of education in their respective countries. Individual and contextual effects are tested applying multilevel analysis. The results show that educational public policies (level of decentralization, degree of comprehensiveness and public spending) as well as the students’ social environment (socioeconomic and cultural status) have a sound impact on the opinions about the state of education.
    Keywords: education, public opinion, public policies, multilevel analysis, comparative studies, European Social Survey
  9. By: Svaleryd, Helena (Research Institute of Industrial Economics); Vlachos, Jonas (Stockholm University)
    Abstract: A fundamental problem in all political systems is that the people in power may extract rents to the detriment of the general public. In a democracy, electoral competition and information provided by the media may keep such rent extraction at bay. We develop a simple model where rents are decreasing in the degree of political competition and voter information. In line with our theoretical predictions, we find that both increased political competition and increased local media coverage reduce direct measures of (legal) political rents among local governments in a non-corrupt democracy (Sweden). Our findings also indicate that the two dimensions of accountability are substitutes rather than complements.
    Keywords: Accountability; Political Competition; Media; Political Rents
    JEL: D72 H10 H70
    Date: 2007–02–16
  10. By: Dominic Rohner
    Abstract: Empirical studies have found ethnic cleavages to play an important role in the occurrence of civil conflict. Surprisingly, theoretical research on ethnic con.ict has been very scarce. In the present contribution a theoretical model of reputation and ethnic conflict is built. Depending on the information structure and the reputation cost of defecting, economic interaction can either result in (peaceful) trade or in appropriative conflict. Ethnic divisions affect the reputation cost of defection and therefore influence the conflict risk. It is shown what respective effects ethnic fractionalisation, polarisation and segregation have on the risk of conflict.
    Keywords: Conflict, Ethnicity, Reputation, Information, Trade
    JEL: C73 D74 F10 L14 Z13
    Date: 2006–11
  11. By: Gil S. Epstein (Bar-Ilan University); Ira N Gang (Rutgers University)
    Abstract: Ethnic networks are a way of overcoming informal barriers to trade such as information costs, risk, and uncertainty by building trust and by substituting for the difficulty of enforcing contracts internationally. We study networks which emerge from the interaction (i) between migrants and natives in the host country and (ii) between migrants and natives in their home country. The degree of assimilation and the strength of the networks do not “just happen”, but are the outcomes of strategic choices of subsets of the migrant population.
    Keywords: Assimilation, migration, ethnic networks, contracts
    JEL: D74 F23 I20
    Date: 2006–12–01
  12. By: Yvan Guichaoua (Centre for Research on Inequality, Human Security and Ethnicity, Queen Elizabeth House, University of Oxford)
    Abstract: The economic analysis of conflicts assigns a crucial role to the rebellion making process. However, the existing literature on this issue often rests on unsatisfactory microfoundations. It tends to overemphasize two extreme forms of mobilisation, namely purely greed-driven or, alternatively, purely ideology-driven. It does not fully address the puzzles associated with the leader-followers interaction within violent organisations. The present paper is an empirical account describing how rank and file members of an ethnic militia are mobilised. The survey shows that the purely economic explanation of violent mobilisation does not hold despite the fact the militia levers its own funds. At least two other considerations are at play for members: first, the feeling of danger, the desire of protection against fuzzily identified risks (criminality, unknown future, menace from other ethnic groups etc.); second, the social proximity to militia insiders. In fact, vulnerability (either perceived or real) might be a more decisive factor in enlistment than poverty per se. Additionally, the paper suggests that the militia studied in Nigeria doesn’t fit the usual binary classification of rebel groups (predatory or ideological) as it is simultaneously an economic, social and political actor in the communities where it operates.
    Keywords: civil conflicts, militia, Nigeria, mobilisation
    Date: 2007–01
  13. By: Carol Propper; Simon Burgess; Anne Bolster; George Leckie; Kelvyn Jones; Ron Johnston
    Abstract: This paper examines the impact of neighbourhood on the income and mental health of individuals living in social housing in the United Kingdom. We exploit a dataset that is representative and longitudinal to match people to their very local neighbourhoods. Using this, we examine the effect of living in a neighbourhood in which the population is more disadvantaged on the levels and change, over a 10-year window, of income and mental health. We find that social renters who live with the most disadvantaged individuals as neighbours have lower levels of household income and poorer mental health. However, neighbourhood appears to have no impact on changes in either household income or individual mental health.
    Keywords: Neighbourhood effects, income, mental health, social renters
    JEL: I30
    Date: 2006–05
  14. By: Luca Anderlini; Dino Gerardi; Roger Lagunoff
    Date: 2007–03–07
  15. By: David McKenzie (World Bank, Development Economics Research Group); Hillel Rapoport (Department of Economics, Bar-Ilan University, CADRE, Université de Lille 2, and CReAM, University College London)
    Abstract: This paper examines the role of migration networks in determining self-selection patterns of Mexico-U.S. migration. We first present a simple theoretical framework showing how such networks impact on migration incentives at different education levels and, consequently, how they are likely to affect the expected skill composition of migration. Using survey data from Mexico, we then show that the probability of migration is increasing with education in communities with low migrant networks, but decreasing with education in communities with high migrant networks. This is consistent with positive self-selection of migrants being driven by high migration costs, as advocated by Chiquiar and Hanson (2005), and with negative self-selection of migrants being driven by lower returns to education in the U.S. than in Mexico, as advocated by Borjas (1987).
    Keywords: Migration, migration networks, educational attainments, self-selection, Mexico
    JEL: O15 J61 D31
    Date: 2007–01
  16. By: Anna Torres; Josep A. Tribó
    Abstract: In this paper we study the interaction between ownership structure and customer satisfaction, and their impact on a firm’s brand equity. We find that customer satisfaction has a positive direct effect on brand equity but an indirect negative one, through reductions in ownership concentration. This latter effect emerges when managers are focused mainly on satisfying customers. It gives out a warning signal that highlights the perverse effect of implementing policies focused excessively on satisfying customers at the expense of shareholders, on a firm’s brand equity. We demonstrate our theoretical contention, empirically, making use of an incomplete panel data comprising 69 firms from 11 different nations for the period 2002-2005.
    Keywords: Corporate social responsibility, Brand equity, Ownership structure and Customer
    JEL: M31
  17. By: Martin Paldam; Erich Gundlach
    Abstract: The Grand Transition (GT) view claims that economic development is causal to institutional development, and that many institutional changes can be understood as transitions occurring at roughly the same level (zones) of development. The Primacy of Institutions (PoI) view claims that economic development is a consequence of an exogenous selection of institutions. Our survey of the empirical evidence and our own estimates reveal that it is easy to find con-vincing evidence supporting either of the two views. Property rights do affect development as suggested by the PoI. However, democracy is mainly an effect of development as suggested by the GT. We conclude that the empirical results are far too mixed to allow for a robust assessment that one of the two views is true and the other false. This finding implies that focusing on institutional development is unlikely to be successful as the key strategy for the economic development of poor countries.
    Keywords: Grand transition, primacy of institutions, democracy, corruption, development
    JEL: B25 O1
    Date: 2007–03
  18. By: Mari Rege, Kjetil Telle and Mark Votruba (Statistics Norway)
    Abstract: We estimate the magnitude of social interaction effects in disability pension participation among older workers in Norway. Specifically, we investigate how a worker’s propensity to draw disability benefits is affected by a plausibly exogenous shock to the disability entry rate of similarly-aged workers in his or her neighborhood. The problem of omitted variable bias is addressed by employing a novel instrumental variable (IV) strategy, using plant downsizing at neighbors’ plants of employment as an instrument for the disability entry rate among one’s previously employed neighbors. Our IV estimates suggest that a one percentage point increase in the participation rate of previously employed neighbors increased the subsequent 4-year entry rate of workers by about one-half a percentage point. Numerous robustness and specification tests appear to support the validity of the identifying assumption in our IV strategy.
    Keywords: disability; downsizing; layoffs; plant closings; social insurance; social interaction; welfare norms
    JEL: H55 I12 I38 J63 J65
    Date: 2007–03
  19. By: George Kapetanios (Queen Mary, University of London); Andrew P. Blake (Bank of England)
    Abstract: This paper develops theoretical results for the estimation of radial basis function neural network specifications, for dependent data, that do not require iterative estimation techniques. Use of the properties of regression based boosting algorithms is made. Both consistency and rate results are derived. An application to nonparametric specification testing illustrates the usefulness of the results.
    Keywords: Neural Networks, Boosting
    JEL: C12 C13 C22
    Date: 2007–03
  20. By: Rigdon, Mary; McCabe, Kevin; Smith, Vernon
    Abstract: It is well-known in evolutionary game theory that population clustering in Prisoner's Dilemma games allows some cooperative strategies to invade populations of stable defecting strategies. We adapt this idea of population clustering to a two-person trust game. Without knowing it, players are typed based on their recent track record as to whether or not they are trusting (Players 1) and whether or not they are trustworthy (Players 2). They are then paired according to those types: trustors with trustworthy types, and similarly non-trustors with untrustworthy types. In the control comparisons, Players 1 are randomly repaired with Players 2 without regard to type. We ask: are there natural tendencies for people to cooperate more frequently in environments in which they experience more cooperation in comparison with controls?
    Keywords: exchange; trust; reciprocity; cooperation; clustering; bargaining; experimental economics
    JEL: D02 D0
    Date: 2001–08
  21. By: Florence Goffette-Nagot (GATE - Groupe d'analyse et de théorie économique - [CNRS : UMR5824] - [Université Lumière - Lyon II] - [Ecole Normale Supérieure Lettres et Sciences Humaines]); Claire Dujardin (CORE - Center for Operations Research and Econometrics - [Université catholique de Louvain])
    Abstract: This paper is aimed at examining how individual unemployment is influenced both by location in a deprived neighborhood and public housing. Our identification strategy is twofold. First, we estimate a simultaneous probit model of public housing accommodation, type of neighborhood, and unemployment, thus accounting explicitely for correlation of unobservables between the three behaviors. Second, we take advantage of the situation of the public housing sector in France, which allows us to use public housing accommodation as a powerful<br />determinant of neighborhood choices and to use household's demographic characteristics as exclusion restrictions. 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. 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.
    Keywords: Neighborhood effects ; public housing ; unemployment ; simultaneous probit models ; simulated maximum likelihood
    Date: 2007–02–28
  22. By: Juergen Bracht; Nick Feltovich
    Abstract: We use a human-subjects experiment to test the effects of a simple mechanism designed to increase cooperation and efficiency in the trust game. In the equilibrium of the standard trust game, the investor does not invest, foreseeing that the allocator would have kept all of the returns from investment. Our mechanism adds a preplay escrow stage, in which the allocator places an amount (possibly zero) into escrow, to be forfeited if he keeps the proceeds of investment for himself. In the experiment, we vary the amounts that can be put into escrow. Our baseline treatment has no escrow. In a second treatment, only low escrow choices are possible, so the equilibrium is unaffected. In our third treatment, there is an escrow amount high enough that, in equilibrium, investment and sharing of the proceeds will occur. Two additional treatments mirror our second and third, except that in these, the escrow amount is randomly chosen and imposed on the allocator. We find that the high escrow amount, when chosen, does lead to the predicted efficient result. Contrary to the equilibrium prediction, we also find substantial investment in both the baseline and “low-escrow” treatments, leading to markedly higher efficiency than predicted (albeit well below that when the high amount is chosen). Over time, however, cooperation and efficiency after low or zero escrow amounts decline. We find only weak evidence for “crowding-out”, which predicts that given a low or zero amount placed into escrow in non-baseline treatments, investment and efficiency would actually be lower than in the baseline. We also find that initially, investment is more likely after allocators place the maximum possible amount into escrow – as if this action by allocators is being (mistakenly) read by investors as a signal that allocators plan to share. All of these results are seen when escrow choices are imposed as well as when they are voluntary.
    Keywords: experiment, trust game, incentives, signal, crowding out
    JEL: C72 D82 A13
    Date: 2006–08
  23. By: Matthew Ellman; Paul Pezanis-Christou
    Abstract: This paper investigates experimentally how organisational decision processes affect the moral motivations of actors inside a firm and firm's resulting willingness to forego profits in order to reduce harming a third party. In a "vertical" treatment, one insider unilaterally sets the harm-reduction strategy; the other can only accept or quit. In a "horizontal" treatment, the insiders decide by consensus. Our 2-by-2 design also controls for communication effects. In our data, communication makes vertical firms more ethical, because voice leads subordinates to feel responsible for what their firms do (mitigating "responsibility-alleviation"). These firms are also more ethical than the horizontal firms in which our bargaining data reveal a dynamic form of "responsibility dilution" and our chat data indicate an enhanced "insider-outsider" e ffect.
    Keywords: experimental economics, group decision-making, organisational structure,
    JEL: C91 C92 D21 D63 D64 D70
    Date: 2007–02–01
  24. By: Emanuele Bacchiocchi (University of Milan, Italy.); Fabio Montobbio (University of Insubria, Varese and CESPRI - Bocconi University, Milan, Italy.)
    Abstract: This paper estimates the process of diffusion and decay of knowledge from university, public laboratories and corporate patents in six countries and tests the differences across countries and across technological fields using data from the European Patent Office. It finds that university and public research patents are more cited relatively to companies’ patents. However these results are mainly driven by the Chemical, and Drugs & Medical fields and US universities. In Europe and Japan, where the great majority of patents from public reserach comes from national agencies, there is no evidence of a superior fertility of university and public laboratories patents vis `a vis corporate patents. The distribution of the citations lags shows that knowledge embedded in university and public research patents tends to diffuse more rapidly relatively to corporate ones in particular in US, Germany, France and Japan.
    Keywords: University patents, Citations, Spillovers, Knowledge Diffusion, Public Research.
    JEL: O30 O33 O34
    Date: 2007–03

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