nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2007‒11‒17
fifteen papers chosen by
Fabio Sabatini
University of Rome, La Sapienza

  1. Consumer Networks and Firm Reputation: A First Experimental Investigation By Gabriele K. Lünser; Jean-Robert Tyran
  2. Unity through Diversity: Value-in-Diversity Beliefs, Work Group Diversity, and Group Identification By Knippenberg, D.L. van; Haslam, S.A.; Platow, M.J.
  3. Cultural Biases in Economic Exchange? By Luigi Guiso; Paola Sapienza; Luigi Zingales
  4. Does Community Participation Produce Dividens in Social Investment Fund Projects? By Carolyn J. Heinrich; Yeri Lopez
  5. The empirics of social capital and economic development: A critical perspective By Sabatini Fabio
  6. Peer Influence in Network Markets: An Empirical Investigation By Block, J.H.; Koellinger, P.
  7. Keeping Up With the Schmidts: An Empirical Test of Relative Deprivation Theory in the Neighbourhood Context By Gundi Knies; Simon Burgess; Carol Propper
  8. Two are Better Than One! Individuals' Contributions to Unpacked Public Goods By Michele Bernasconi, Luca Corazzini, Sebastian Kube, Michel André Maréchal.
  9. An experimental investigation of collusion in hard-close auctions: partners and friends By Sascha Füllbrunn; Tibor Neugebauer
  10. Understanding Diversity By Knippenberg, D.L. van
  11. The Actual Structure of eBay’s Feedback Mechanism and Early Evidence on the Effects of Recent Changes By Tobias J. Klein; Christian Lambertz; Giancarlo Spagnolo; Konrad O. Stahl
  12. The impact of trust on the mode of transaction governance between manufacturer and distributor By Berulava George; Lezhava David
  13. Comparing the Networks of Ethnic Japanese and Ethnic Chinese in International Trade By Kumagai, Satoru
  14. I distretti del gusto: Nuovi sistemi produttivi di loisir, tra deficit di politiche e i nuovi processi di sviluppo locale By Bortoletti Nico; Minardi Everardo

  1. By: Gabriele K. Lünser (University College London); Jean-Robert Tyran (Department of Economics, University of Copenhagen)
    Abstract: Arguing that consumers are the carriers of firms’ reputations, we examine the role of consumer networks for trust in markets that suffer from moral hazard. When consumers are embedded in a network, they can exchange information with their neighbours about their private experiences with different sellers. We find that such information exchange fosters firms' incentives for reputation building and, thus, enhances trust and efficiency in markets. This efficiency-enhancing effect is already achieved with a rather low level of network density.
    Keywords: trust; consumer networks; moral hazard; information conditions; reputation
    JEL: C72 C92 D40 L14
    Date: 2007–11
  2. By: Knippenberg, D.L. van; Haslam, S.A.; Platow, M.J. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Research on work group diversity has more or less neglected the possibility that reactions to diversity may be informed by individuals' beliefs about the value of diversity (vs. homogeneity) for their work group. We studied the role of such diversity beliefs as a moderator of the relationship between work group diversity and individuals' identification with the work group across two studies. Study 1 was a cross-sectional survey that focused on gender diversity and gender diversity beliefs. Study 2 was a laboratory experiment in which work group diversity and diversity beliefs were manipulated. Results of both studies support the prediction that work group diversity and group identification are more positively related the more individuals believe in the value of diversity
    Keywords: diversity;identification;value-in-diversity;social identity;self-categorization;
    Date: 2007–10–30
  3. By: Luigi Guiso; Paola Sapienza; Luigi Zingales
    Abstract: How much do cultural biases affect economic exchange? We try to answer this question by using the relative trust European citizens have for citizens of other countries. First, we document that this trust is affected not only by objective characteristics of the country being trusted, but also by cultural aspects of the match between trusting country and trusted country, such as religion, history of conflicts, and genetic and somatic similarities. We then find that lower relative levels of trust toward citizens of a country lead to less trade with that country, less portfolio investment, and less direct investment in that country, even after controlling for the objective characteristics of that country. This effect is stronger for goods that are more trust intensive and doubles or triples when trust is instrumented with its cultural determinants. Our results suggest that perceptions rooted in culture are important (and generally omitted) determinants of economic exchange.
    Keywords: Culture, beliefs, trade, trust
    JEL: A1 F1
    Date: 2007
  4. By: Carolyn J. Heinrich (La Follette School of Public Affairs); Yeri Lopez (La Follette School of Public Affairs)
    Abstract: Social investment funds, a widely used tool of development efforts, aim to support and strengthen local capacity for effective implementation of social and economic infrastructure projects through participatory, community-driven approaches. We investigate whether these participatory methods improve the outcomes of education projects and community members' perceptions of their effectiveness using data from an impact evaluation of the third phase of the Fondo Hondureño de Inversión Social (FHIS). We also make an important contribution with more carefully defined and explicit measures of individuals' participation in community projects. We do not find statistically significant effects of the education projects on academic outcomes of school-aged youth, but we do observe positive, statistically significant relationships between the use of participatory methodologies and household opinions of the projects, as well as between households' level of participation and their opinions of the projects.
    Keywords: --
    JEL: N36
    Date: 2007–03
  5. By: Sabatini Fabio
    Date: 2007–11
  6. By: Block, J.H.; Koellinger, P. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: We analyze the effect of peer influence on the diffusion of an innovative network good. We argue that the adopters of a network good have an incentive to convince others to purchase the same product because their utility depends on the number of other users. This peer-effect influences individuals? adoption decisions alongside the more familiar installed-base-effect, based on the individual?s own insight that a larger number of installed units increases his/her benefit of adopting. We test empirically which effect dominates with Instant Messaging, an innovative network good. We arrive at surprising results with far-reaching implications for research and management. The diffusion of Instant Messaging was to a large extent driven by the peer-effect, but the installed-base-effect seemed to play no role. We perform our estimation with a discrete time hazard rate model that controls for unobserved heterogeneity.
    Keywords: Innovation Diffusion;Peer Influence;Network Markets;Hazard Rate Model;Instant Messaging;
    Date: 2007–09–14
  7. By: Gundi Knies; Simon Burgess; Carol Propper
    Abstract: We test empirically whether people’s life satisfaction depends on their relative income position in the neighbourhood, drawing on a unique dataset, the German Socio-economic Panel Study (SOEP) matched with micro-marketing indicators of population characteristics. Relative deprivation theory suggests that individuals are happier the better their relative income position in the neighbourhood is. To test this theory we estimate micro-economic happiness models for the years 1994 and 1999 with controls for own income and for neighbourhood income at the zip-code level (roughly 9,000 people). There exist no negative and no statistically significant associations between neighbourhood income and life satisfaction, which refutes relative deprivation theory. If anything, we find positive associations between neighbourhood income and happiness in all cross-sectional models and this is robust to a number of robustness tests, including adding in more controls for neighbourhood quality, changing the outcome variable, and interacting neighbourhood income with indicators that proxy the extent to which individuals may be assumed to interact with their neighbours. We argue that the scale at which we measure neighbourhood characteristics may be too large still to identify the comparison effect sought after.
    Keywords: Life satisfaction, Neighbourhood effects, Comparison income, Reference group
    JEL: I31 C23 Z1
    Date: 2007–05
  8. By: Michele Bernasconi, Luca Corazzini, Sebastian Kube, Michel André Maréchal. (ISLA, Universita' Bocconi, Milano)
    Abstract: We study the effects on voluntary contributions of unpacking a single linear public good into distinct but identical parts. In our experiment, subjects either participate to a one linear public good game or a two linear and identical public goods game, with marginal per capita returns of contributions being constant across treatments. We find that unpacking public goods significantly increases contributions of both unexperienced and experienced subjects. Our results highlight new strategies for NGOs for increasing charitable donations.
    Keywords: Voluntary contributions to public goods, unpacking effect, laboratory experiment, charitable donations.
    JEL: C91 C92 H40 H41
    Date: 2007–11
  9. By: Sascha Füllbrunn (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg); Tibor Neugebauer (Leibniz University of Hanover)
    Abstract: We study collusion in the finitely repeated, hard-close auction experiment. Three subjects, identified by their bidder name, simultaneously compete in three auction markets. Due to the experimental design, subjects are enabled to the sharing of the benefits of cooperation by coordinating their individual demands. Similar collusive behavior has been suggested to play an important role in empirical markets (Klemperer 2002). We consider two treatments. In the first one, the partners treatment, subjects who are identified by bidder-names interact repeatedly but anonymously with each other. In the second one, the friends treatment, groups of three subjects who participate together in the experiment, interact repeatedly with another. In the experiment, we do not observe tacit collusion in the partners treatment; the outcome is efficient and prices converge quickly to the rational equilibrium prediction. Only in the friends treatment, cooperation gains can be realized, but much less cooperation is observed than one would imagine. We conclude that in the laboratory, cooperation is difficult to achieve in the hard-close auction market if anonymity prevails.
    Keywords: multi unit auctions, collusion, experimental economics
    JEL: D44 C92
    Date: 2007–11
  10. By: Knippenberg, D.L. van (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: The key question in diversity research is how differences between group members affect work group process and performance. Over 50 years of research have made clear that diversity can have positive as well as negative effects on performance, but research and practice are still struggling to formulate models that are able to make sense of these diverging effects and that offer clear guidance in how to manage diversity. The Categorization-Elaboration Model (CEM) addresses this issue. The CEM proposes that the effects of work group diversity on group performance should be understood in terms of two processes that have independent and interactive effects: elaboration of task-relevant information and social categorization. Diversity may have positive effects on performance to the extent that it engenders the exchange and integration of task-relevant information (elaboration). At the same time, diversity may be detrimental to performance to the extent that it engenders ?us-them? distinctions (social categorization) and intergroup biases ? especially because these intergroup biases disrupt information elaboration processes. The CEM also identifies the factors on which the occurrence of elaboration and social categorization processes is contingent, factors that may offer clear angles for the management of diversity.
    Keywords: Diversity;group performance;group composition;team performance;team composition;social categorization;group decision making;information elaboration;
    Date: 2007–10–12
  11. By: Tobias J. Klein (Tilburg University, CentER, IZA, and netspar,; Christian Lambertz (University of Mannheim,; Giancarlo Spagnolo (University of Rome "Tor Vergata", SITE - Stockholm School of Economics, C.E.P.R., ENCORE,; Konrad O. Stahl (University of Mannheim, C.E.P.R., CESifo, and ZEW,
    Abstract: eBay’s feedback mechanism is considered crucial to establishing and maintaining trust on the world’s largest trading platform. The effects of a user’s reputation on the probability of sale and on prices are at the center of a large number of studies. More recent theoretical work considers aspects of the mechanism itself. Yet, there is confusion amongst users about its exact institutional details, which also changed substantially in the last few months. An understanding of these details, and how the mechanism is perceived by users, is crucial for any assessment of the system. We provide a thorough description of the institutional setup of eBay’s feedback mechanism, including recent changes to it. Most importantly, buyers now have the possibility to leave additional, anonymous ratings on sellers on four different criteria. We discuss the implications of these changes and provide first descriptive evidence on their impact on rating behavior.
    Keywords: eBay, reputation mechanism, strategic feedback behavior, informational content, reciprocity, fear of retaliation
    JEL: D44 L15 L86
    Date: 2007–11
  12. By: Berulava George; Lezhava David
    Abstract: The goal of the project is to explore main determinants of transaction governance mode between manufacturer and distributor firms. The model proposed in this paper integrates the concept of trust with main transaction cost economics’ dimensions and is formulated in the form of multinomial logit function. The model will be estimated with data from a sample of Georgian manufacturing industry. The main hypothesis of the study is that trust will modify the influence of traditional transaction cost economics dimensions on the choice of exchange governance mode.
    JEL: D23 L14 L22
    Date: 2007–11–06
  13. By: Kumagai, Satoru
    Abstract: In this paper I re-examined the trade enhancing effects of ethnic Chinese networks, found by Rauch and Trindade (2002), on a newer and extended data set. The effects are estimated by the gravity equation with the product of the population ratio (or absolute number) of the ethnic Chinese in both the importing and exporting countries, and are reaffirmed positive and statistically significant. I also compared the effects of two different ethnic Japanese networks, i.e., the networks of long-term Japanese stayers in foreign countries, and the networks of permanent Japanese residents in foreign countries. It is found that the former has stronger trade enhancing effects than the latter. This shows that the effects of ethnic networks on international trade can be generalized beyond the ethnic Chinese, and the ’cohesiveness’ of the ethnic network matters to the trade enhancing effects of the network.
    Keywords: Trade, Networks, East Asia, China, Japan, International trade, Overseas Chinese, Overseas Japanese
    JEL: F10
    Date: 2007–07
  14. By: Bortoletti Nico; Minardi Everardo
    Abstract: Sulla scorta di una revisione critica dei concetti di loisir, territorio, distretto, fiducia comunitaria, creatività, innovazione sociale, vengono ipotizzati dei distretti di produzione del gusto come elementi con dinamiche produttive assimilabili a quelle avute nelle regioni della c.d. Terza Italia, ma con uno specifico produttivo rivolto verso la dimensione estetica e simbolica dei territori. Vengono posti in evidenza alcuni meccanismi regolativi di questa nuova dimensione che viene evidenziata essere una dimensione non necessariamente alternativa ma co-esistente alla dimensione classica dello sviluppo economico locale. Vengono infine rilevati alcuni problemi di governance del locale che influenzano (negativamente) l’affermarsi di queste nuove forme di fruizione estetica dei luoghi, ma che possono trovare parziale soluzione nei processi di empowerment della partecipazione e della conoscenza comunitaria.
    Date: 2007–11
  15. By: Francis Vella (Georgetown University); Lídia Farré (Universidad de Alicante)
    Abstract: Using a sample of mother-child pairs from the National Longitudinal Survey of Youth 1979 we explore the intergenerational transmission of a social norm regarding women¿s roles and examine its implications for the labor market behavior of females. We find that a mother¿s attitudes towards working women have a statistically significant effect on those of her children. Furthermore we find that the component of this social norm that is correlated with the individual¿s mother¿s work behavior during that individual¿s youth not only affects the labor market force participation decision of a female individual, but also has an equally strong association with that of the wife of a male individual. The findings indicate that cultural transmission contributes to the intergenerational similarity in the work behavior of females.
    Keywords: intergenerational cultural transmission, gender role attitudes, female labor force participation.
    JEL: J12 J62 D1 Z1
    Date: 2007–10

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