nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2007‒06‒11
24 papers chosen by
Fabio Sabatini
University of Rome, La Sapienza

  1. Endogenous growth, decline in social capital and expansion of market activities By Bartolini, Stefano; Bonatti, Luigi
  2. Directed Altruism and Enforced Reciprocity in Social Networks: How Much is A Friend Worth? By Stephen Leider; Markus M. Möbius; Tanya Rosenblat; Quoc-Anh Do
  3. Trust, Fear, Reciprocity, and Altruism: Theory and Experiment By James C. Cox
  4. Trust and Growth: A Shaky Relationship By Berggren, Niclas; Elinder, Mikael; Jordahl, Henrik
  5. Social Distance and Reciprocity By Lucy F. Ackert; Bryan K. Church; Shawn Davis
  6. Implications of Trust, Fear, and Reciprocity for Modeling Economic Behavior By James C. Cox; Klarita Sadiraj; Vjollca Vjollca
  7. On the Emergence of Social Norms By Edward Cartwright
  8. Does more money buy you more happiness? By Baucells, Manel; Sarin, Rakesh K.
  9. Socioeconomic Networks with Long-Range Interactions By Rui Carvalho; Giulia Iori; Rui Carvalho
  10. Radical Innovation and Network Evolution By Sandra Phlippen; Massimo Riccaboni
  11. The New Social Science Imperialism and the Problem of Knowledge in Contemporary Economics By William Milberg
  12. Altruism Spillovers: Are Behaviors in Context-Free Experiments Predictive of Altruism Toward a Naturally Occurring Public Good? By Susan K. Laury; Laura O. Taylor
  13. Self-enforcing Norms and the Efficient Non-cooperative Organization of Clans By Konrad, Kai A; Leininger, Wolfgang
  14. Social Learning, Search and Heterogeneity of Payoffs By Edward Cartwright
  15. Contractually Stable Networks By Jean-Francois Caulier; Ana Mauleon; Vincent VAnnetelbosch
  16. Adam Smith’s Account of Self-Deceit and Informal Institutions. By Caroline Gerschlager
  17. On Modeling Voluntary Contributions to Public Goods By James C. Cox; Vjollca Sadiraj
  18. Community and Class Antagonism By Dasgupta, Indraneel; Kanbur, Ravi
  19. Which way to cooperate By Kaplan, Todd; Ruffle, Bradley
  20. Confidence Management: On Interpersonal Comparisons in Teams By Benoît S.Y. Crutzen; Otto H. Swank; Bauke Visser
  21. Socio-economic Exclusion of Different Religious Communities in Meghalaya By Mishra, SK
  22. Happiness Adaptation to Income and to Status in an Individual Panel By Rafael Di Tella; John Haisken-De New; Robert MacCulloch
  23. Intangible Investment in Japan: Measurement and Contribution to Economic Growth By FUKAO Kyoji; HAMAGATA Sumio; MIYAGAWA Tsutomu; TONOGI Konomi
  24. Revealed Altruism By James C. Cox; Daniel Friedman; Vjollca Sadiraj

  1. By: Bartolini, Stefano; Bonatti, Luigi
    Abstract: We model in an endogenous growth set-up the hypotheses that the expansion of market activities weakens social capital formation, and that firms can invest in formal mechanisms of control and enforcement to substitute for social capital (trust, work ethics, honesty). The model shows that the economy tends to grow faster when it is relatively poorer in social capital and that perpetual growth can be consistent with the progressive erosion of social capital. These results may help reconciling Putnam’s claim that social capital has declined in the U.S. with the satisfactory growth performance of the U.S. economy over the same period.
    Keywords: Generalized trust; externalities; marketization; social assets
    JEL: Q20 O41 O13 Z13
    Date: 2007–05
  2. By: Stephen Leider; Markus M. Möbius; Tanya Rosenblat; Quoc-Anh Do
    Abstract: We conduct field experiments in a large real-world social network to examine why decision makers treat friends more generously than strangers. Subjects are asked to divide surplus between themselves and named partners at various social distances, where only one of the decisions is implemented. In order to separate altruistic and future interaction motives, we implement an anonymous treatment where neither player is told at the end of the experiment which decision was selected for payment and a non-anonymous treatment where both players are told. Moreover, we include both games where transfers increase and decrease social surplus to distinguish between different future interaction channels including signaling one's generosity and enforced reciprocity, where the decision maker treats the partner to a favor because she can expect it to be repaid in the future. We can decompose altruistic preferences into baseline altruism towards any partner and directed altruism towards friends. Decision makers vary widely in their baseline altruism, but pass at least 50 percent more surplus to friends compared to strangers when decision making is anonymous. Under non-anonymity, transfers to friends increase by an extra 24 percent relative to strangers, but only in games where transfers increase social surplus. This effect increases with density of the network structure between both players, but does not depend on the average amount of time spent together each week. Our findings are well explained by enforced reciprocity, but not by signaling or preference-based reciprocity. We also find that partners' expectations are well calibrated to directed altruism, but that they ignore decision makers' baseline altruism. Partners with high baseline altruism have friends with higher baseline altruism and are therefore treated better.
    JEL: C73 C91 D64
    Date: 2007–05
  3. By: James C. Cox
    Abstract: This paper describes central topics in our research program on social preferences. The discussion covers experimental designs that discriminate among alternative components of preferences such as unconditional altruism, positive reciprocity, trust (in positive reciprocity), negative reciprocity, and fear (of negative reciprocity). The paper describes experimental data on effects of social distance and decision context on reciprocal behavior and male vs. female and group vs. individual differences in reciprocity. The exposition includes experimental designs that provide direct tests of alternative models of social preferences and summarizes implications of data for the models. The discussion reviews models of other-regarding preferences that are and are not conditional on others’ revealed intentions and the implications of data for these models.
  4. By: Berggren, Niclas (The Ratio Institute); Elinder, Mikael (Uppsala University); Jordahl, Henrik (Research Institute of Industrial Economics (IFN))
    Abstract: We conduct an extensive robustness analysis of the relationship between trust and growth by investigating a later time period and a bigger sample than in previous studies. In addition to robustness tests that focus on model uncertainty, we systematize the investigation of outlier influence on the results by using the robust estimation technique Least Trimmed Squares. We find that when outliers (especially China) are removed, the trust-growth relationship is no longer robust. On average, the trust coefficient is half as large as in previous findings.
    Keywords: Trust; Growth; Robustness; Social Capital; Outliers
    JEL: O40 Z13
    Date: 2007–05–24
  5. By: Lucy F. Ackert; Bryan K. Church; Shawn Davis
    Abstract: Contrary to the predictions of non-cooperative game theory, trust and reciprocity are commonly reported in simple games. We conduct a one-shot investment game to examine how social distance affects behavior in two-person exchanges. Two aspects of social distance are examined: ex post revelation of complete information on the second player’s choice set and ex post revelation of information regarding the second player’s identity. The results indicate that reciprocity is not affected by knowledge of the choice set, but depends critically on the possible revelation of the decision maker’s identity. That is, the possibility that the second player’s identity (picture) is revealed to his/her counterpart has a profound effect on the degree of reciprocity extended.
    Date: 2006–03
  6. By: James C. Cox; Klarita Sadiraj; Vjollca Vjollca
    Abstract: This paper reports three experiments with triadic or dyadic designs. The experiments include the moonlighting game in which first-mover actions can elicit positively or negatively reciprocal reactions from second movers. First movers can be motivated by trust in positive reciprocity or fear of negative reciprocity, in addition to unconditional other-regarding preferences. Second movers can be motivated by unconditional other-regarding preferences as well as positive or negative reciprocity. The experimental designs include control treatments that discriminate among actions with alternative motivations. Data from our three experiments and a fourth one are used to explore methodological questions, including the effects on behavioral hypothesis tests of within-subjects vs. across-subjects designs, single-blind vs. double-blind payoffs, random vs. dictator first-mover control treatments, and strategy responses vs. sequential play.
    JEL: C70 C91 D63 D64
  7. By: Edward Cartwright
    Abstract: We consider a model of conformity that permits a non-conformist equilibrium and multiple conformist equilibria. Agents are assumed to behave according to a best reply learning dynamic. We details the conditions under which a social norm and conformity emerge. The emergence of conformity depends on the distribution of intrinsic preferences, the relative costs and benefits of conformity and the topology of agent interaction.
    Keywords: Social norms; conformity; best reply
    JEL: C7 D11
    Date: 2007–01
  8. By: Baucells, Manel (IESE Business School); Sarin, Rakesh K. (UCLA Anderson School of Management)
    Abstract: Why do we believe that more money will buy us more happiness (when in fact it does not)? In this paper, we propose a model to explain this puzzle. The model incorporates both adaptation and social comparison. A rational person who fully accounts for the dynamics of these factors would indeed buy more happiness with money. We argue that projection bias, that is, the tendency to project into the future our current reference levels, precludes subjects from correctly calculating the utility obtained from consumption. Projection bias has two effects. First, it makes people overrate the happiness that they will obtain from money. Second, it makes people misallocate the consumption budget by consuming too much at the beginning of the planning horizon, or consuming too much of adaptive goods.
    Keywords: Happiness; Life Satisfaction; Social Comparison; Consumer Life-Cycle Planning; Projection Bias;
    Date: 2007–02–14
  9. By: Rui Carvalho (University College London); Giulia Iori (Department of Economics, City University, London); Rui Carvalho
    Abstract: In well networked communities, information is often shared informally among an individual’s direct and indirect acquaintances. Here we study a modified version of a model previously proposed by Jackson and Wolinsky to account for communicating information and allocating goods in socioeconomic networks. The model defines a utility function of node i which is a weighted sum of contributions from all nodes accessible from i. First, we show that scale-free networks are more efficient than Poisson networks for the range of average degree typically found in real world networks. We then study an evolving network mechanism where new nodes attach to existing ones preferentially by utility. We find the presence of three regimes: scale-free (rich-get-richer), fit-get-rich, and Poisson degree distribution. The fit-get-rich regime is characterized by a decrease in average path length.
    Date: 2007–06
  10. By: Sandra Phlippen (Erasmus Universiteit Rotterdam); Massimo Riccaboni (University of Florida)
    Abstract: This paper examines how a radical technological innovation affects alliance formation of firms and subsequent network structures. We use longitudinal data of interfirm R&D collaborations in the biopharmaceutical industry in which a new technological regime is established. Our findings suggest that it requires radical technological change for firms to leave their embedded path of existing alliances and form new alliances with new partners. While new partners are mostly found through the firms’ existing network, we provide some insight into distant link formation with unknown partners, which contributes to our understanding of how ‘small-worlds’ might emerge.
    Keywords: Pharmaceutical industry; Biotechnology industry; R&D; Technological change; Alliances; Networks
    JEL: O32 O31 L14 L24 M13 M21
    Date: 2007–05–10
  11. By: William Milberg (New School for Social Research, New York, NY)
    Keywords: imperialism; contemporary economics; knowledge
    Date: 2007–02–23
  12. By: Susan K. Laury; Laura O. Taylor
    Abstract: This paper addresses the external validity of experiments investigating the characteristics of altruism in the voluntary provision of public goods. We conduct two related experiments that allow us to examine whether individuals who act more altruistically in the context-free environment are also more likely to act altruistically toward a naturally-occurring public good. We find that laboratory behavior can be predictive of contributions toward naturally-occurring goods, but not in a uniform way. In fact, parametric measures of altruism do a poor job of predicting which subjects are most likely to contribute to a naturally-occurring public good.
    JEL: C91 D64 H41
  13. By: Konrad, Kai A; Leininger, Wolfgang
    Abstract: We study how norms can solve distributional conflict inside a clan and the efficient coordination of collective action in a conflict with an external enemy. We characterize a fully non-cooperative equilibrium in a finite game in which a self-enforcing norm coordinates the members on efficient collective action and on a peaceful distribution of the returns of collective action.
    Keywords: collective action; defence; distributional conflict; free-riding; norms; war
    JEL: D72 D74 H11 H41
    Date: 2007–06
  14. By: Edward Cartwright
    Abstract: We consider a simple model that combines elements of search and social learning. Acting in sequence, and observing the action adopted by a previous agent, agents must search for an action. We explore why agent heterogeneity may increase expected payoffs and demonstrate that social learning may be most effective if agents are heterogenous.
    Keywords: Social learning; search; herding
    JEL: C7 D8
    Date: 2007–01
  15. By: Jean-Francois Caulier; Ana Mauleon; Vincent VAnnetelbosch
    Date: 2007–06–02
  16. By: Caroline Gerschlager (Free University of Brussels, DULBEA, av. F. D. Roosevelt, 50, B-1050 Brussels,)
    Abstract: According to Adam Smith, self-deceit is essential to the economy. In this light the paper draws on the Theory of Moral Sentiments and revisits Adam Smith’s view of the self. The originality of Smith’s account of self-deceit is seen in his insights into self-regulating social forces. The paper illustrates how, in this view, informal institutions are important because they countervail self-deceit in markets. It suggests that Smith overestimated these countervailing forces for the reason that informal norms are also able to amplify selfdeceiving agents.
    Keywords: self-deception, self-love, sympathy, informal norms, self-regulation, positive and negative feedback.
    JEL: B B
    Date: 2007–05
  17. By: James C. Cox; Vjollca Sadiraj
    Abstract: This paper addresses four "stylized facts" that summarize data from experimental studies of voluntary contributions to provision of public goods. Theoretical propositions and testable hypotheses for voluntary contributions are derived from two models of social preferences, the inequity aversion model and the egocentric other-regarding preferences model. We find that the egocentric other-regarding preferences model with classical regularity properties can better account for the stylized facts than the inequity aversion model with non-classical properties.
    JEL: C70 C91 D64 H41
    Date: 2006–10
  18. By: Dasgupta, Indraneel; Kanbur, Ravi
    Abstract: We investigate how vertical unity within a community interacts with horizontal class divisions of an unequal income distribution. Community is conceptualized in terms of a public good to which all those in the community have equal access, but from which outsiders are excluded. We formulate the idea of redistributive tension, or class antagonism, in terms of the costs that poorer individuals would be willing to impose on the rich, to achieve a given gain in personal income. Our conclusion is that the nominal distribution of income could give a misleading picture of tensions in society, both within and across communities. Ideologies of community solidarity may well trump those of class solidarity because of the implicit sharing of community resources brought about by community-specific public goods. Greater economic mobility of particular types may actually exacerbate class tensions instead of attenuating them. We illustrate our theoretical results with a discussion of a number of historical episodes of shifting class tensions and alliances.
    Keywords: Class Conflict; Community; Distribution; Ethnic Conflict; Inequality; Public Goods
    JEL: D31 D63 D74 Z13
    Date: 2007–06
  19. By: Kaplan, Todd; Ruffle, Bradley
    Abstract: Cooperation in real-world dilemmas takes many forms. We introduce a class of two-player games that permits two distinct ways to cooperate in the repeated game. One way to cooperate is to play cutoff strategies, which rely solely on a player's private value to defection. The second cooperative strategy is to take turns, which relies on publicly available information. Our initial experiments reveal that almost all cooperators adopt cutoff strategies. However, follow-up experiments in which the distribution of values to defection are made more similar show that all cooperators now take turns. Our results offer insight into what form a cooperative norm will take: for mundane tasks or where individuals otherwise have similar payoffs, taking turns is likely; for difficult tasks that differentiate individuals by skill or by preferences, cutoff cooperation will emerge.
    Keywords: experimental economics; cooperation; incomplete information; alternating; cutoff strategies; random payoffs.
    JEL: C90
    Date: 2007–06–01
  20. By: Benoît S.Y. Crutzen (Erasmus Universiteit Rotterdam); Otto H. Swank (Erasmus Universiteit Rotterdam); Bauke Visser (Erasmus Universiteit Rotterdam)
    Abstract: Organization differ in the degree to which they differentiate employees by ability. We analyse how the effect of differentiation on employee morale may explain this variation. By comparing employees using ordinary talk, a manager boosts the self-image of some, but hurts that of others. Whether the net effect is positive for the organization depends on the degree of synergy between employees and on the shape of their objective function. An implication for relative performance pay is that it yields a double dividend or constitutes a double-edged sword.
    Keywords: Comparisons; Confidence; Teams; Cheap talk
    JEL: D82 L23 J31
    Date: 2007–05–30
  21. By: Mishra, SK
    Abstract: Meghalaya, a state in the North Eastern India, is inhabited by over 2.3 million of population of which 70 percent are Christian, 13 percent are Hindus and a little over 4 percent are Muslims as obtained in the Census 2001. In this study we investigate if numerical dominance of a community leads to socio-economic dominance. We have constructed two composite indices of exclusion by weighted aggregation of 13 socio-economic indicators. The first composite index (I1) is obtained by maximization of the sum of absolute coefficients of correlation of the index with the indicator variables, while the second index (I2) is constructed by the principal components analysis that maximizes the sum of squared coefficients of correlation of the index with the indicator variables. In our judgment, the first index presents the reality more correctly, as a number of indicators undermined by I2 are given their due representation in I1. A perusal of the index (I1) reveals that while the Christian segment of population in the rural areas of Meghalaya is certainly better off than their Hindu or Muslim counterparts, they score comparatively poorly in the urban areas of Meghalaya. In the urban areas, the Muslim segment of the population is in the most advantageous position, followed by the Hindus. The Christians segment of population is more intensively excluded from the benefits of development. Thus, numerical dominance of a particular religious community does not entail socio-economic advantages. The advantages of numerical dominance may well be absorbed by the intra-community inequalities in the command over resources and opportunities.
    Keywords: Religious communities; Hindu; Muslim; Christian; Meghalaya; exclusion; inequality; composite index; principal components; maximization; absolute; coefficient; correlation; North East; India
    JEL: C61 C43 R11
    Date: 2007–06–08
  22. By: Rafael Di Tella; John Haisken-De New; Robert MacCulloch
    Abstract: We study "habituation" to income and to status using individual panel data on the happiness of 7,812 people living in Germany from 1984 to 2000. Specifically, we estimate a "happiness equation" defined over several lags of income and status and compare the long run effects. We can (cannot) reject the hypothesis of no adaptation to income (status) during the four years following an income (status) change. In the short-run (current year) a one standard deviation increase in status and 52% of one standard deviation in income are associated with similar increases in happiness. In the long-run (five year average) a one standard deviation increase in status has a similar effect to an increase of 285% of a standard deviation in income. We also present different estimates of habituation across sub-groups. For example, we find that those on the right (left) of the political spectrum adapt to status (income) but not to income (status).
    JEL: D0 I31
    Date: 2007–06
  23. By: FUKAO Kyoji; HAMAGATA Sumio; MIYAGAWA Tsutomu; TONOGI Konomi
    Abstract: The purpose of this paper is to measure intangible assets, to construct the capital stock of intangible assets, and to examine the contribution of intangible capital to economic growth in Japan. We follow the approach of Corrado, Hulten, and Sichel (2005, 2006) to measure intangible investment using the 2006 version of the Japan Industry Productivity Database. We find that the ratio of intangible investment to GDP in Japan has risen during the past 20 years and now stands at 7.5%. However, the ratios of intangible investment to GDP and of intangible to tangible investment in Japan are smaller than the values estimated for the US by Corrado et al. (2006). In addition, we find that the growth rate for intangible capital in Japan declined from the 1980s to the 1990s, which is in stark contrast to the high growth rate for intangible capital in the US in the late 1990s. Therefore, the contribution of intangible capital to total labor productivity growth in Japan is substantially smaller than in the US.
    Date: 2007–05
  24. By: James C. Cox; Daniel Friedman; Vjollca Sadiraj
    Abstract: This paper develops a nonparametric theory of preferences over one's own and others' monetary payoffs. We introduce "more altruistic than" (MAT), a partial ordering over preferences, and interpret it with known parametric models. We also introduce and illustrate "more generous than" (MGT), a partial ordering over opportunity sets. Several recent studies focus on two player extensive form games of complete information in which the first mover (FM) chooses a more or less generous opportunity set for the second mover (SM). Here reciprocity can be formalized as the assertion that an MGT choice by the FM will elicit MAT preferences in the SM. A further assertion is that the effect on preferences is stronger for acts of commission by FM than for acts of omission. We state and prove propositions on the observable consequences of these assertions. Finally, empirical support for the propositions is found in existing data from investment games and from Stackelberg games and in new data from Stackelberg mini-games.

This nep-soc issue is ©2007 by Fabio Sabatini. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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