nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2009‒01‒03
eleven papers chosen by
Fabio Sabatini
University of Siena

  1. On the Economics and Biology of Trust By Fehr, Ernst
  2. Well-being and Trust in the Workplace By John F. Helliwell; Haifang Huang
  3. Social Norms, Information, and Trust among Strangers By John Duffy; Huan Xie; Yong-Ju Lee
  4. Happiness and Productivity By Oswald, Andrew J.; Proto, Eugenio; Sgroi, Daniel
  6. The economic value of virtue By Fabio Mariani
  7. The importance of foregone options By Ana Espinola-Arredondo; Felix Munoz-Garcia
  8. The Two Faces of Open Innovation: NetworkExternalities and Learning. By Muge Ozman
  9. Worker Self-Selection and the Profits from Cooperation By Kosfeld, Michael; von Siemens, Ferdinand
  10. Exploring Network Effects of Point-to-Point Networks: An Investigation of the Spatial Entry Patterns of Southwest Airlines By Jia Yan; Xiaowen Fu; Tae Oum

  1. By: Fehr, Ernst (University of Zurich)
    Abstract: In recent years, many social scientists have claimed that trust plays an important role in economic and social transactions. Despite its proposed importance, the measurement and the definition of trust seem to be not fully settled, and the identification of the exact role of trust in economic interactions has proven to be elusive. It is still not clear whether trust is just an epiphenomenon of good institutions or whether it plays an independent causal role capable of shaping important aggregate economic outcomes. In this paper, I rely on a behavioral definition of trust that enables us to relate it to economic primitives such as preferences and beliefs. I review strong biological and behavioral evidence indicating that trusting is not just a special case of risk-taking, but based on important forms of social preferences such as betrayal aversion. Behaviorally defined trust also opens the door for understanding national and ethnic trust differences in terms of differences in preferences and beliefs, and it suggests ways to examine and interpret a causal role of trust.
    Keywords: trust, preferences, beliefs, biological basis
    JEL: C7 D00 D2 D7 D8
    Date: 2008–12
  2. By: John F. Helliwell; Haifang Huang
    Abstract: This paper summarizes and extends our recent work using life satisfaction regressions to estimate the relative values of financial and non-financial job characteristics. The well-being results show strikingly large values for non-financial job characteristics, especially workplace trust and other measures of the quality of social capital in workplaces. For example, an increase of trust in management that is about one tenth of the scale is equivalent to more than 30% increase in monetary income. We find that these values differ significantly by gender and by union status. We consider the reasons for such large values, and explore their implications for employers, employees, and policy-makers.
    JEL: I31 J16 J31 J51
    Date: 2008–12
  3. By: John Duffy (University of Pittsburgh); Huan Xie (Concordia University); Yong-Ju Lee (Samsung Research Institute of Finance)
    Abstract: How do norms of trust and reciprocity arise? We investigate this question by examining behavior in an experiment where subjects play a series of indefinitely repeated trust games. Players are randomly and anonymously matched each period. The parameters of the game are chosen to support trust and reciprocity as a sequential equilibrium when no reputational information is available. The main question addressed is whether a social norm of trust and reciprocity emerges under the most extreme information restriction (community-wide enforcement) or whether trust and reciprocity require additional, individual-specific information about a player's past history of play. In the absence of such reputational information, we find that a social norm of trust and reciprocity is difficult to sustain. The provision of reputational information on past individual decisions significantly increases trust and reciprocity when subjects have experienced the absence of such a mechanism. Importantly, we find that making reputational information available at a small cost may also lead to a significant improvement in trust and reciprocity, despite the fact that most subjects do not choose to purchase this information.
    Keywords: Social Norms, Trust Game, Random Matching, Trust and Reciprocity, Information, Reputational Information
    JEL: C72 C91 C92
    Date: 2008–10
  4. By: Oswald, Andrew J. (Department of Economics, University of Warwick); Proto, Eugenio (Department of Economics, University of Warwick); Sgroi, Daniel (Department of Economics, University of Warwick)
    Abstract: Little is known by economists about how emotions affect productivity. To make persuasive progress, some way has to be found to assign people exogenously to different feelings. We design a randomized trial. In it, some subjects have their happiness levels increased, while others in a control group do not. We show that a rise in happiness leads to greater productivity in a paid piece-rate task. The effect is large; it can be replicated; it is not a reciprocity effect; and it is found equally among males and females. We discuss the implications for economics.
    Keywords: Labor productivity ; emotions ; well-being ; happiness ; positive affect ; experimental economics
    Date: 2008
  5. By: Katia Melnik (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales - CNRS : UMR6579); Jean-Benoît Zimmermann (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales - CNRS : UMR6579)
    Abstract: We develop an economic model of association based on voluntary contributions. Different equilibria corresponding to the different modes of formation of associations are analyzed and the results are compared with existing empirical literature. The main contribution consists in formalizing the voluntary association as a means of providing collectiveconsumption goods or services. We introduce the concept of the subjective quality as a possible incentive for volunteering. The model stresses the importance of non-pecuniary rewards and of accepted differentiation for well-functioning of voluntary organizations.
    Keywords: Voluntary Association, Public Good, Volunteering
    Date: 2008–12–15
  6. By: Fabio Mariani (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, IZA - Institute for the Study of Labor)
    Abstract: We model virtue as an asset on the marriage market : since men value virginity in prospective mates, preserving their virtue increases girls' chances of getting a "good" husband, and therefore allows for upward social mobility. Consistent with some historical and anthropological evidence, we find that the diffusion (and the social value) of virginity, across societies and over time, can be determined, among others, by income inequality, gender differences, social stratification and overall economic development. This is a further example of how cultural and moral values can be affected by economic factors.
    Keywords: Mating, marriage, cultural value, social classes, inequality.
    Date: 2008–12
  7. By: Ana Espinola-Arredondo; Felix Munoz-Garcia (School of Economic Sciences, Washington State University)
    Abstract: Recent experimental evidence supports the in?uence of a player?s unchosen alternatives in other agent?s actions. This paper examines a tractable theoretical model of reference-dependent preferences in which individuals compare other players?chosen action with respect to their un- chosen alternatives. We analyze the equilibrium prediction in complete information sequential- move games, and compare it with that of standard games where players are not concerned about unchosen alternatives. We show that, without relying on interpersonal payo¤ comparisons (i.e., with strictly individualistic agents), our model predicts higher cooperation among the players than standard game-theoretic models. In addition, our framework embodies certain behavioral models from the literature on social status acquisition and intentions-based reciprocity as spe- cial cases. Finally, we con?rm our results in three economic applications: the labor market gift exchange game, the ultimatum bargaining game, and the sequential public good game.
    Keywords: Unchosen alternatives, Sequential-move games, Relative comparisons, Kindness, Reciprocity.
    JEL: C72 C78 C91
    Date: 2008–08
  8. By: Muge Ozman
    Abstract: In this paper I differentiate between two types of benefits of open innova- tion. Network externalities e¤ect happens when open innovation increases the participation of one group of users which increases the value of adoption for another group of users. Learning e¤ect happens when economic actors increase their knowledge through access to external sources of knowledge. I investigate how each effect can be dominant depending on nature of products, by drawing upon previous research in product modularity. In addition I discuss the fac- tors which will strengthen or weaken the e¤ects of each dimension. The main variables which influence learning are, tacitness of knowledge, technological op- portunities, appropriability of knowledge and turbulence. Network externalities e¤ect can be strengthened by increased user innovation.
    Date: 2008
  9. By: Kosfeld, Michael (University of Frankfurt); von Siemens, Ferdinand (University of Amsterdam)
    Abstract: We investigate a competitive labor market with team production. Workers differ in their motivation to exert team effort and types are private information. We show that there can exist a separating equilibrium in which workers self-select into different firms and firms employing cooperative workers make strictly positive profits. Profit differences across firms persist because cooperation strictly increases output and worker separation requires firms employing cooperative workers to pay out weakly lower wages.
    Keywords: team work, self-selection
    JEL: D82 D86 M50
    Date: 2008–12
  10. By: Jia Yan; Xiaowen Fu; Tae Oum (School of Economic Sciences, Washington State University)
    Abstract: This paper explores network effects in Point-to-Point airline networks by examining the spatial entry patterns of Southwest airlines during the 1990-2006 period. Estimation results from a spatial probit model reveal clear spatial dependence in profitability across different routes served by the carrier. Detailed investigation suggests two main sources of network effects, namely: (1) airport and regional presence, and (2) substitutability of markets. Findings of the paper suggest also that the network effects embedded in Southwest’s Point-to-Point network have many distinguishing features as compared to those identified in a typical Hub-and-Spoke network. This study brings some fresh insights on airline network effects in general, as well as explaining the pattern of aggressive network expansions of LCCs in particular.
    Keywords: Point-to-Point Networks, spatial entry patterns, Southwest airlines, spatial probit model
    Date: 2008–11
  11. By: Natasha T. Duncan; Brigitte S. Waldorf (Department of Agricultural Economics, College of Agriculture, Purdue University)
    Abstract: The United States provides a path to citizenship for its newcomers. Unlike other immigration countries, however, the United States does not have policies that ease assimilation or directly promote naturalization such as easily accessible and widely advertised language and civic instruction courses. Immigrants are by and large left on their own when facing legal and financial barriers or seeking instruction to pass the citizenship test. Not surprisingly, thus, we find that immigrants’ attributes such as educational attainment, English language proficiency, and income affect naturalization rates. This paper analyzes whether naturalization rates are also affected by neighborhood characteristics and informal networks for assistance and information. Towards that end, we estimate a binary model of immigrants’ citizenship status specifying the size of the immigrant enclave and its level of assimilation as key explanatory variables. The study uses 2005 ACS data, and focuses on immigrants from the Caribbean islands in the New York area. The results suggest that who they are and where they live has substantial impacts on immigrants’ propensities to have acquired US citizenship. Citizenship is unlikely for recent arrivals, those who do not speak English well, are poorly educated, and have a low income. Moreover, living in a neighborhood with a well assimilated immigrant enclave enhances the chance of acquiring US citizenship. This effect is stronger for highly educated than for poorly educated immigrants and thus misses the more vulnerable segments of the immigrant population.
    Keywords: US Immigration, Assimilation, Caribbean Immigrants
    JEL: J15 J61
    Date: 2008

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