nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2008‒05‒10
fifteen papers chosen by
Fabio Sabatini
University of Rome, La Sapienza

  1. Searching for the Best Neighborhood: Mobility and Social Interactions By Yannis M. Ioannides; Giulio Zanella
  2. Technology adoption and herding behavior in complex social networks By Natalie Svarcova; Petr Svarc
  3. The Power of Positional Concerns By Benno Torgler; Sascha L. Schmidt; Bruno S. Frey
  4. Reciprocity, Exchange and Redistribution. An experimental investigation inspired by Karl Polanyi’s The Economy as Instituted Process By Giuseppe Danese; Luigi Mittone
  5. Moral Hazard and Peer Monitoring in a Laboratory Microfinance Experiment By Timothy N. Cason; Lata Gangadharan; Pushkar Maitra
  6. The Rise of the Mega-Region By Florida, Richard; Gulden, Tim; Mellander, Charlotta
  7. Introducing Social Capital Value Add: Manifesto for New Social Network Structural Management of Corporate Value By Michael, Cayley
  8. Territorial cooperation and regional economic development: a case study By M. Bruna Zolin; Matilde Cassin
  9. Post-Conflict Recovery: Resource Mobilization and Peacebuilding By James Boyce
  10. Do Different Types of Innovation Rely on Specific Kinds of Knowledge Interactions? By Franz Tödtling; Patrick Lehner; Alexander Kaufmann
  11. How Can Voters Classify an Incumbent under Output Persistence By Caleiro, António
  12. Changes in the Concept of and Approaches to Work Satisfaction By Kaarel Haav
  13. The Role of Organisational Stakeholders in the Formulation of Values Statements By Krista Jaakson
  14. Democracy, Income, and Environmental Quality By Kevin Gallagher; Strom Thacker
  15. Socially-Tolerable Discrimination By Amegashie, J. Atsu

  1. By: Yannis M. Ioannides; Giulio Zanella
    Abstract: The paper seeks to contribute to the social interactions literature by exploiting data on individuals’ self-selection into neighborhoods. We study a model in which households search for the best location in the presence of neighborhood effects in the formation of children’s human capital and in the process of cultural transmission. We use micro data from the PSID which we have merged, using geocodes, with contextual information at the levels of census tracts and of counties from the 2000 US Census. We control for numerous individual characteristics and neighborhood attributes and find, consistently with neighbourhood effects models, that households with children, but not those without, are more likely to move out of neighborhoods whose attributes are not favorable to the production of human capital and the transmission of parents’ cultural traits, and to move into neighborhoods which instead exhibit desirable such attributes.
    JEL: R23 Z13
    Date: 2008–05
  2. By: Natalie Svarcova (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic); Petr Svarc (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)
    Abstract: Using a simple computational model, we study consequences of herding behavior in population of agents connected in networks with different topologies: random networks, small-world networks and scale-free networks. Agents sequentially choose between two technologies using very simple rules based on the previous choice of their immediate neighbors. We show that different seeding of technologies can lead to very different results in the choice of majority of agents. We mainly focus on the situation where one technology is seeded randomly while the other is directed to targeted (highly connected) agents. We show that even if the initial seeding is positively biased toward the first technology (more agents start with the choice of the first technology) the dynamic of the model can result in the majority choosing the second technology under the targeted hub approach. Even if the change to majority choice is highly improbable targeted seeding can lead to more favorable results. The explanation is that targeting hubs enhances the diffusion of the firm’s own technology and halts or slows-down the adoption of the concurrent one. Comparison of the results for different network topologies also leads to the conclusion that the overall results are affected by the distribution of number of connections (degree) of individual agents, mainly by its variance.
    Keywords: technology adoption, simulation, networks, herding behavior
    JEL: D71 D74
    Date: 2008–05
  3. By: Benno Torgler; Sascha L. Schmidt; Bruno S. Frey
    Abstract: People care a great deal about their relative economic position and not solely about their absolute economic position. However, behavioral evidence is rare. This paper provides evidence on how the relative income position affects professional sports performances. Our analysis suggests that if a player’s salary is below the average and this difference increases, his performance worsens. Moreover, the larger the income differences, the stronger positional concern effects are observable. We also find that the more the players are integrated, the more evident a relative income effect is. Finally, we find that positional effects are stronger among high performing teams.
    Keywords: Relative income, positional concerns, organizational justice, envy, social comparison, relative derivation, equity theory, prospect theory, loss aversion, performance
    JEL: D00 D60 L83
    Date: 2008–04
  4. By: Giuseppe Danese; Luigi Mittone
    Abstract: Inspired by Karl Polanyi’s writings on three allocation modes, namely reciprocity, exchange and redistribution, we first tested a reciprocity ring with ten players. The baseline treatment, with no possibility of socialisation, displayed very low levels of allocative efficiency. Consistently with the Polanyian approach to reciprocity, we found that inducing the notion of symmetry among the players increased efficiency levels significantly. We then simulated a market exchange, with significant allocative efficiency gains. We conclude that indirect-reciprocity rings among anonymous players can seldom function in the absence of definite institutional refinements, promoting forms of symmetry-acknowledgement.
    Keywords: Reciprocity, Redistribution, Exchange, Comparative Institutional Analysis.
    JEL: Z13 D02 C91
    Date: 2008
  5. By: Timothy N. Cason; Lata Gangadharan; Pushkar Maitra
    Abstract: Most problems with formal sector credit lending to the poor in developing countries can be attributed to the lack of information and inadequate collateral. One common feature of successful credit mechanisms is group-lending, where the loan is advanced to an individual if he/she is a part of a group and members of the borrowing group can monitor each other. Since group members have better information about each other compared to lenders, peer monitoring is often less expensive than lender monitoring. Theoretically this leads to greater monitoring and greater rates of loan repayments. This paper reports the results from a laboratory experiment of group lending in the presence of moral hazard and (costly) peer monitoring. We compare peer monitoring treatments when credit is provided to members of the group sequentially and simultaneously, and individual lending with lender monitoring. The results depend on the relative cost of monitoring by the peer vis-à-vis the lender. In the more typical case where the cost of peer monitoring is lower than the cost of lender monitoring, our results suggest that peer monitoring results in higher loan frequencies, higher monitoring and higher repayment rates compared to lender monitoring. In the absence of monitoring cost differences, performance is mostly similar across group and individual lending schemes, although loan frequencies and monitoring rates are sometimes modestly greater with group lending. Within group lending, although the dynamic incentives provided by sequential leading generate the greatest equilibrium surplus, simultaneous group leading provides equivalent empirical performance.
    Keywords: Group Lending, Monitoring, Moral Hazard, Laboratory Experiment, Loans, Development
    JEL: G21 C92 O2
    Date: 2008–03
  6. By: Florida, Richard (MPI Rotman School of Management); Gulden, Tim (Center for International and Security Studies at the University of Maryland School of Public Policy); Mellander, Charlotta (Prosperity Institute of Scandinavia JIBS and CESIS)
    Abstract: This paper uses a global dataset of nighttime light emissions to produce an objectively consistent set of mega-regions for the globe. We draw on high resolution population data to estimate the population of each of these regions. We then process the light data in combination with published estimates of national GDP to produce rough but useful estimates of the economic activity of each region. We also present estimates of technological and scientific innovation. We identify 40 mega-regions with economic output of more than $100 billion that produce 66 percent of world output and accounts for 85 percent of global innovation.
    Keywords: Mega-region; Globalization; Urbanization; Nighttime lights
    JEL: O18 R10
    Date: 2008–04–28
  7. By: Michael, Cayley
    Abstract: Within the field of social capital study, concerns have been expressed that deviations from a fundamental understanding that social capital is captured from embedded resources in social networks may reduce the intellectual enterprise to a catch all fad (Lin, Cook, Burt, 1999). This paper is an argument that sometime in 2004, when broadband internet connections became more prevalent than those of less capacity, individuals became empowered as our most intense form of media. Scaled up effects of the Individual as Medium including: • increased information flow, • exertion of influence, • expansion of social credentials and reinforcement of identity and recognition, are consistent with a network theory of social capital. Corporations are exposed to new risks and opportunities due to these scaled up forms of social capital and they require new methods to manage them. Social Capital Value Add is introduced as such a new method, designed to link the pioneering intellectual enterprise of social capital to value based management and the priorities of marketers. A plausible SCVA valuation method is proposed to demonstrate how these links may be articulated in a way that is meaningful for investors and corporate managers.
    Keywords: "social capital"; "corporate value"; "Web 2.0"; "corporate valuation"; "social media"; "memetic brand"; brand
    JEL: M1 Z13 G3
    Date: 2008–03
  8. By: M. Bruna Zolin (Department of Economics, University Of Venice Cà Foscari); Matilde Cassin (Department of Economics, University Of Venice Cà Foscari)
    Abstract: Cooperation may be defined as the collaboration between two or more parties which fuels initiatives that have shared, or converging interests and objectives. In the European Union territorial cohesion has recently been included in the draft of the European Constitution and is complementary to the EU drive towards economic and social cohesion. This adds a new dimension to European integration which clearly recognises that considering things from a territorial dimension is a tool for reducing the territorial disparity currently present in the EU. In fact, well before its enlargement, significant disparities in prosperity levels existed both between and within member states: prosperity levels in the ten most dynamic regions of the EU, based on GDP per capita, were nearly three times higher than that of the ten least developed regions and regional differences have widened with enlargement. In this context, the territorial cooperation objective aims to: improve cross-border cooperation through joint, local and regional initiatives; strengthen trans-national cooperation by means of actions conducive to integrated territorial development linked to Community priorities as well as to strengthen interregional cooperation and the exchange of experience at the appropriate territorial level. Three different typologies of territorial cooperation have been identified with the European territory: cross-border cooperation, trans-national cooperation and Interregional cooperation. The paper focuses on the territorial cooperation objective and presents a case study with large and strong economic, social and environmental disparities. It includes EU members and non EU members. More specifically, the IPA (Instrument for Pre-Accession Assistance) Adriatic Cross Border Cooperation (CBC) Program, which includes three EU Member States, one Candidate Country, and three Potential Candidates Countries.
    Keywords: cooperation, regional disparities, european external instruments
    JEL: O2 P4 R1
    Date: 2008
  9. By: James Boyce
    Abstract: <p class="MsoNormal">Societies embarked on the fragile transition from war to peace face enormous economic, social, and political challenges. In attempting to support this transition, the international community often provides substantial amounts of external assistance. This aid can play an important and constructive role in meeting pressing social needs and building a durable peace, but it would be naïve to assume either that positive effects are the automatic result of good intentions or that donors are motivated entirely by the objective of peacebuilding. This paper reviews evidence on the impact of aid in “post-conflict” settings and offers suggestions for making aid more effective in supporting efforts to build a durable peace. Part I discusses how economic assistance and conditionalities can be realigned to better serve peacebuilding objectives. Part II considers the other side of the coin: how peacekeeping operations and peacebuilding assistance can better support economic recovery, in particular by helping to build state fiscal capacities. Finally, Part III examines the interests and incentive structures that shape the behavior of aid donors, suggesting that their actions can be part of the problem as well as part of the solution.</p><span style="font-size: 12pt; font-family: "Times New Roman";"></span>
    Keywords: Peacebuilding; post-conflict reconstruction; conditionality; revenue mobilization;horizontal equity; polarization; foreign aid.
    JEL: F35 F53 H2 O19 O23
    Date: 2008
  10. By: Franz Tödtling; Patrick Lehner; Alexander Kaufmann
    Date: 2008
  11. By: Caleiro, António
    Abstract: The literature on electoral cycles has developed in two distinct phases. The first one considered the existence of non-rational (naive) voters whereas the second one considered fully rational voters. In our perspective, an intermediate approach is more interesting, i.e. one that considers learning voters, which are boundedly rational. In this sense, neural networks may be considered as learning mechanisms used by voters to perform a classification of the incumbent in order to distinguish opportunistic (electorally motivated) from benevolent (non-electorally motivated) behaviour. The paper shows in which circumstances a neural network, namely a perceptron, can resolve that problem of classification. This is done by considering a model allowing for output persistence, which is a feature of aggregate supply that, indeed, may make it impossible to correctly classify the incumbent.
    Keywords: Classification, elections, incumbent, neural networks, output, persistence, perceptrons
    JEL: C45 D72 E32
    Date: 2008
  12. By: Kaarel Haav (International University Audentes)
    Abstract: TThe paper reviews the main changes in the concept of work satisfaction in organization theory and management practice in the last century. It particularly focuses on developments in Estonia. The author contrasts dualist and integrated concepts of employees and organizations. Most of the empirical studies focus on hedonistic individuals and ignore the social construction of identities (Shamir 1991). In such psychological framework, the dilemmas of attitude-behaviour and satisfaction-performance can not be solved. Although the role of integrated approaches is increasing (especially in theories on organizational culture and identity), the psychological paradigm still dominates, especially in the practice of traditional hierarchical organizations. The paper describes a theoretical and an empirical typology of work satisfaction, based on social (organizational) and psychological (motivational) dimensions. They were developed in Estonia in the 1970s. These typologies reveal the role of satisfaction in regulation of work activities. The author relies on social and psychological dimensions of leadership and designs a new typology of leadership styles.
    Keywords: work motivation and activity, typology of satisfaction, psychological and sociological approaches, work and organizational design, employee participation
    JEL: M14
    Date: 2008
  13. By: Krista Jaakson (Institute of Business Administration, University of Tartu)
    Abstract: Although the literature on organisational values is plentiful, little is known about the process of formulating the statements that reflect those values in an organisation. Furthermore, the way that stakeholder groups are treated in the existing literature is dramatically different when it comes to their involvement in the values formulation process. There is no consensus on whether and who to consult when adopting values statements. The aim of the current paper is to offer a model for stakeholder involvement in the process of formulating organisational values statements. First, the categories of values are discussed in order to understand the subject matter. Next, the potential impact of values statements on different stakeholders is mapped and a basis for distinct levels of stakeholder involvement is formed. The model for stakeholder involvement presented in the final chapter rests on the idea that the higher the impact of the values statement on stakeholders the more they deserve to be involved in the process of formulating these values.
    Keywords: organisational values, value statements, stakeholder involvement
    JEL: J53 M14 L14
    Date: 2008
  14. By: Kevin Gallagher; Strom Thacker
    Abstract: This Working Paper considers the role of democracy in environmental quality and the Environmental Kuznets Curve (EKC). Some studies in the EKC literature have examined the extent to which democratic nations are more or less apt to have improving environmental conditions, but they have drawn from static measures of a nation’s current regime. In this paper the authors examine panel data from 1960 to 2001 and analyze the extent to which both the current level and the stock of a country’s democracy have significant and independent effects on a nation’s sulfur and carbon dioxide emissions.While they find no evidence for the short-run effect of the current level of democracy, they do find strong evidence that long-term democracy stock helps lower sulfur and carbon dioxide emissions.
    Keywords: Environmental Kuznets Curve; political economy of environment; sulfur emissions; carbon dioxide emissions; democracy; democracy stock; democracy and environment
    Date: 2008
  15. By: Amegashie, J. Atsu
    Abstract: History is replete with overt discrimination on the basis of race, gender, age, citizenship, ethnicity, marital status, academic performance, health status, volume of market transactions, religion, sexual orientation, etc. However, these forms of discrimination are not equally tolerable. For example, discrimination based on immutable or prohibitively unalterable characteristics such as race, gender, or ethnicity is much less acceptable. Why? I develop a simple rent-seeking model of conflict which is driven by either racial (gender or ethnic) discrimination or generational discrimination (i.e., young versus old). When the conflicts are mutually exclusive, I find that racial discrimination is socially intolerable for a much wider range of parameter values relative to generational discrimination. When they are not mutually exclusive, I find that racial discrimination can be socially intolerable while generational discrimination is socially tolerable. The converse is not true. My results are not driven by a stronger intrinsic aversion to discrimination on the basis of immutable characteristics. I am able to explain why some forms of discrimination (e.g., racism) are much less tolerable than other forms of discrimination (e.g., age discrimination) without making any value judgements about either form of discrimination.
    Keywords: conflict; contest; discrimination; race; generation; rent-seeking.
    JEL: D72 K4
    Date: 2008–05–01

This nep-soc issue is ©2008 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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