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on Social Norms and Social Capital |
| By: | Markus Mobius; Adam Szeidl |
| Abstract: | This paper builds a theory of informal contract enforcement in social networks. In our model, relationships between individuals generate social collateral that can be used to control moral hazard when agents interact in a borrowing relationship. We define trust between two agents as the maximum amount that one can borrow from the other, and derive a simple reduced form expression for trust as a function of the social network. We show that trust is higher in more connected and more homogenous societies, and relate our trust measure to commonly used network statistics. Our model predicts that dense networks generate greater welfare when arrangements typically require high trust, and loose networks create more welfare otherwise. Using data on social networks and behavior in dictator games, we document evidence consistent with the quantitative predictions of the model. |
| JEL: | D02 D23 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13126&r=soc |
| By: | Alberto Chong (Inter-American Development Bank) |
| Abstract: | Language serves two key functions. It enables communication between agents, which allows for the establishment and operation of formal and informal institutions. It also serves a less obvious function, a reassuring quality more closely related to issues linked with trust, social capital, and cultural identification. While research on the role of language as a learning process is widespread, there is no evidence on the role of language as a signal of cultural affinity. I pursue this latter avenue of research and show that subtle language affinity is positively linked with change in earnings when using English-speaking data for cities in the Golden Horseshoe area in Southern Ontario during the period 1991 to 2001. The results are robust to changes in specification, a broad number of empirical tests, and a diverse set of outcome variables. |
| Keywords: | Linguistics; Culture; English; Trust; Governance; Institutions; Canada |
| JEL: | O40 Z13 O51 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:idb:wpaper:1042&r=soc |
| By: | Lauren Cohen; Andrea Frazzini; Christopher Malloy |
| Abstract: | This paper uses social networks to identify information transfer in security markets. We focus on connections between mutual fund managers and corporate board members via shared education networks. We find that portfolio managers place larger bets on firms they are connected to through their network, and perform significantly better on these holdings relative to their non-connected holdings. A replicating portfolio of connected stocks outperforms a replicating portfolio of non-connected stocks by up to 8.4% per year. Returns are concentrated around corporate news announcements, consistent with mutual fund managers gaining an informational advantage through the education networks. Our results suggest that social networks may be an important mechanism for information flow into asset prices. |
| JEL: | G10 G11 G14 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13121&r=soc |
| By: | Massimiliano Mazzanti (University of Ferrara); Susanna Mancinelli (University of Ferrara) |
| Abstract: | The paper addresses the relevancy of networking activities and R&D as main drivers of productivity performance and ouput innovation, for small and medium enterprises (SME) playing in a local economic system. Given the intangible nature of many techno organisational innovation and networking strategies, original recent survey data for manufacturing and services are exploited. The aim is to provide new evidence on the complementarity relationships concerning different networking activities and R&D in a local SME oriented system in Northern Italy. We first introduce a methodological framework to empirically test complementarity among R&D and networking, in a discrete setting. Secondly, we consequently present empirical evidence on productivity drivers and on complementarity between R&D and networking strategies, with respect to firm productivity and process/product output innovation. R&D is a main driver of innovation and productivity, even without networking. This may signify, in association with the evidence on complementarity, that firm expenditures on R&D are a primary driver for performance. The complementarity with networking is a consequential step. Networking by itself cannot thus play a role in stimulating productivity and innovation. It can be a complementary factor in situations where cooperation and networking are needed to achieve economies of scale and/or to merge and integrate diverse skills, technologies and competencies. This is compatible with a framework where networking is the public good part of an impure public good wherein R&D plays the part of the private-led driving force towards structural break from the business as usual scenario. Managers and policy makers should be aware that in order to exploit asset complementarity, possibly transformed into competitive advantages, both R&D and networking are to be sustained and favoured. our evidence suggests that R&D may be a single main driver of performance. Since R&D expenditures are associated with firm size, a policy sustain is to be directed towards firm enlargement. After a certain threshold firms have the force to increase expenditures. The size effect is nevertheless non monotonous. Then, but not least important, for the majority of firms still remaining under a critical size threshold, policy incentives should be directed to R&D in connection with networking, through which a virtuous circle may arise. It is worth noting that it is not networking as such the main engine. Networking elements are crucially linked to innovation dynamics; it is nevertheless innovation that explains and drives networking, and not the often claimed mere existence of local spillovers or of a civic associative culture in the territory. Such public good factors exist but are likely to evolve with and be sustained by firm innovative dynamics. |
| Keywords: | Firm Competitiveness, Innovation, R&D, Networking, Complementarity, Local Economic System |
| JEL: | D21 L25 O3 O14 Z13 |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2007.50&r=soc |
| By: | Jean-Pierre Danthine (University of Lausanne, Swiss Finance Institute and CEPR); Xiangrong JIN (Hong Kong Monetary Authority) |
| Abstract: | Recent studies have found unmeasured intangible capital to be large and important. In this paper we observe that by nature intangible capital is also very different from physical capital. We find it plausible to argue that the accumulation process for intangible capital differs significantly from the process by which physical capital accumulates. We study the implications of this hypothesis for rational firm valuation and asset pricing using a two-sector general equilibrium model. Our main finding is that the properties of firm valuation and stock prices are very dependent on the assumed accumulation process for intangible capital. If one entertains the possibility that intangible investments translates into capital stochastically, we find that plausible levels of macroeconomic volatility are compatible with highly variable corporate valuations, P/E ratios and stock returns. |
| Keywords: | Intangible capital, corporate valuation, stock return volatility |
| JEL: | D24 D50 G12 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:chf:rpseri:rp18&r=soc |
| By: | Matteo Cervellati; Joan Esteban; Laurence Kranich |
| Abstract: | Moral values influence individual behavior and social interactions. A specially significant instance is the case of moral values concerning work effort. Individuals determine what they take to be proper behaviour and judge the others, and themselves, accordingly. They increase their esteem -and self-esteem- for those who perform in excess of the standard and decrease their esteem for those who work less. These changes in self-esteem result from the self-regulatory emotions of guilt or pride extensively studied in Social Psychology. We examine the interactions between sentiments, individual behaviour and the social contract in a model of rational voting over redistribution where individual self-esteem and relative es-teem for others are endogenously determined. Individuals differ in their productivities. The desired extent of redistribution depends both on individual income and on individual attitudes toward others. We characterize the politico-economic equilibria in which s |
| Keywords: | Social Contract, Endogenous Sentiments, Voting over Taxes, Moral Work |
| JEL: | D64 D72 Z13 H3 J2 |
| Date: | 2007–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:aub:autbar:702.07&r=soc |
| By: | Frankel, David M.; Volij, Oscar |
| Abstract: | We propose a set of axioms for the measurement of school-based segregation with any number of ethnic groups. These axioms are motivated by two criteria. The first is evenness: how much do ethnic groups’ distributions across schools differ? The second is representativeness: how different are schools’ ethnic distributions from one another? We prove that a unique ordering satisfies our axioms. It is represented by an index that was originally proposed by Henri Theil (1971). This “Mutual Information Index” is related to Theil’s better known Entropy Index, which violates two of our axioms. |
| Keywords: | Segregation, indices, measurement, peer effects, schools, education, equal opportunity. |
| JEL: | R0 |
| Date: | 2007–05–24 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genres:12818&r=soc |
| By: | Antonio Cabrales; Raffaele Miniaci; Marco Piovesan; Giovanni Ponti |
| Abstract: | This paper reports experimental evidence on a stylized labor market. The experiment is designed as a sequence of three treatments. In the last treatment, TR3, four principals, who face four teams of two agents, compete by offering the agents a contract from a fixed menu. In this menu, each contract is the optimal solution of a (complete information) mechanism design problem where principals face agents’ who have social (i.e. interdependent) distributional preferences a’ la Fehr and Schmidt [19] with a specific parametrization. Each agent selects one of the available contracts offered by the principals (i.e. he “chooses to work” for a principal). Production is determined by the outcome of a simple effort game induced by the chosen contract. In the first two treatments, TR1 and TR2, we estimate individual social preference parameters and beliefs in the effort game, respectively. We find that social preferences are significant determinants of the matching process between labor supply and demand in the market stage, as well as principals’ and agents’ contract and effort decisions. In addition, we also see that social preferences explain the matching process in the labor market, as agents display a higher propensity to choose to work for a principal with similar distributional preferences. |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:cte:werepe:we072010&r=soc |
| By: | Nori Tarui (Department of Economics, University of Hawaii at Manoa); Charles Mason (Department of Economics and Finance, University of Wyoming); Stephen Polasky (Department of Applied Economics, University of Minnesota); Greg Ellis (Department of Economics, University of Washington) |
| Abstract: | We model a dynamic common property resource game with unobservable actions and non-linear stock dependent costs. We propose a strategy profile that generates a worst perfect equilibrium in the punishment phase, thereby supporting cooperation under the widest set of conditions. We show under what set of parameter values for the discount rate, resource growth rate, harvest price, and the number of resource users, this strategy supports cooperation in the commons as a subgame perfect equilibrium. The strategy profile that we propose, which involves harsh punishment after a defection followed by forgiveness, is consistent with human behavior observed in experiments and common property resource case studies. |
| Keywords: | Common property resource, cooperation, dynamic game, unobservable actions |
| JEL: | D62 Q20 |
| Date: | 2006–11 |
| URL: | http://d.repec.org/n?u=RePEc:hai:wpaper:200711&r=soc |
| By: | Nekby, Lena (Dept. of Economics, Stockholm University); Rödin, Magnus (Dept. of Economics, Stockholm University) |
| Abstract: | This paper explores the identity formation of a cohort of students with immigrant backgrounds in Sweden and the consequences of identity for subsequent labor market outcomes. Unique for this study is that identity is defined according to a two-dimensional acculturation framework based on both strength of identity to the (ethnic) minority and to the (Swedish) majority culture. Results indicate that what matters for labor market outcomes is strength of identification with the majority culture regardless of strength of (ethnic) minority identity. Labor market outcomes vary little between the assimilated and the integrated who have in common a strong majority identity but varying minority identity. Correlations between identity and labor market outcomes are however, an entirely male phenomenon. |
| Keywords: | Ethnic Identity; Acculturation; Ethnic minorities; Employment; Income |
| JEL: | J15 J16 J21 Z13 |
| Date: | 2007–05–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sunrpe:2007_0007&r=soc |
| By: | Giulia Minoia (Fondazione Eni Enrico Mattei) |
| Abstract: | This article aims to investigate some aspects of the social process related to water resources management and gender relations. Given that gender and water management are interrelated issues exposed to a growing attention at the international level, it is therefore necessary to identify relations between the academic literature, the institutional framework and the field-based research. This document has been inspired by the Nostrum DSS project (Network on Governance, Science and Technology for Sustainable Water Resources Management in the Mediterranean), a Co-ordination Action funded by the European Commission, which involves eighteen partners from the North and South shores of the basin. As the scope of the project is to disseminate Best Practice Guidelines for the design and implementation of Decision Support System tools (DSS) to identify optimal water resources management regimes, this article is proposing an analysis of a particular geographical and social frame related to the social actors involved in the project, but there are no connections between the paper and the project itself. To create a network between science, policy and civil society is one of the main objectives of the project in order to reach an improved governance and planning in the field of sustainable water management. Therefore, to investigate gender sensitivity in some areas of the basin shall provide a clue. This overview of academic and institutional background refers to a particular geographical and cultural area, the Middle Eastern and North African region. In the first section lies the theoretical background, that has been extrapolated from international organisations guidelines and scholars’ publications. The second section is specifically focused on the Egyptian geographical context. The first paragraph presents a review of the guidelines suggested by international organisations related to policies on gender and water, as parts of the changes that the global scenario has recently been facing, with the shift from the micro level to the macro level. The second paragraph then describes the side effects of these overspread trends, which are identified in their missing relations with the social context of the intervention. The third and fourth paragraphs introduce the issue of women’s role in water management in the Middle Eastern and North African Regions, while highlighting relations between women’s involvement in the public sphere and the role they cover in local communities organisations. The proportion of the political representation faced by women in this region is also discussed, tackling their overspread participation in agriculture and their unrecognised working status. The fifth paragraph of this paper will discuss a case study in Egypt, concerning an initiative promoted by international donors and the government aimed at increasing community participation in the design and management of irrigation canals. The case study gives a concrete sample to discuss plusses and problems of women’s participation in water users organisations, synthesising many of the theoretical issues that have been raised in the first three parts of this article. |
| Keywords: | Irrigation, Gender, Regional Development Policy |
| JEL: | J16 Z13 |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2007.49&r=soc |