nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2009‒06‒10
eight papers chosen by
Fabio Sabatini
University of Siena

  1. The Importance of Trust for Investment: Evidence from Venture Capital By Bottazzi, L.; Da Rin, M.; Hellmann, T.
  2. Strategic Information Transmission in Networks By Andrea Galeotti; Christian Ghiglino; Francesco Squintani
  3. Social networks among indigenous peoples in Mexico By Skoufias, Emmanuel; Lunde, Trine; Patrinos, Harry Anthony
  4. Network-independent partner selection and the evolution of innovation networks By Baum, Joel; Cowan, Robin; Jonard, Nicolas
  5. Housing’s Effects on Social and Ethnic Segregation and Gentrification in Vienna’s Ottakring By Blair Schaeffer
  6. Religiosity and happiness: an ever-winning couple? An answer from India By Migheli, Matteo
  7. A Dynamic Theory of Fidelity Networks with an Application to the Spread of HIV/AIDS By Roland Pongou; Roberto Serrano
  8. Supply Chains and Social Network Analysis By Mueller, Rolf A.E.; Buergelt, Doreen; Seidel-Lass, Linda

  1. By: Bottazzi, L.; Da Rin, M.; Hellmann, T. (Tilburg University, Center for Economic Research)
    Abstract: We examine the effect of trust on financial investment and contracting decisions in a micro-economic environment where trust is exogenous. Using hand-collected data on European venture capital, we show that the Eurobarometer measure of trust among nations significantly affects investment decisions. This holds even after controlling for investor and company fixed effects, geographic distance, information and transaction costs. The national identity of venture capital firms’ individual partners further contributes to the effect of trust. Education and work experience reduce the effect of trust but do not eliminate it. We also examine the relationship between trust and sophisticated contracts involving contingent control rights and find that, even after controlling for endogeneity, they are complements, not substitutes.
    Keywords: Venture Capital;Social Capital;Trust;Financial Contracts;Corporate Governance.
    JEL: G24 G34 K22 M13
    Date: 2009
  2. By: Andrea Galeotti; Christian Ghiglino; Francesco Squintani
    Abstract: We introduce a tractable model of cheap talk among players located on networks. In our model, a player can send a message to another player if and only if he is linked to him. We derive a sharp equilibrium and welfare characterization which reveals two basic insights. In equilibrium, the willingness of a player to communicate with a neighbor decreases with the number of opponents who communicate with the neighbor. The ex-ante equilibrium welfare of every player increases not only with the number of truthful reports transmitted in the network, but also when truthful reports are more evenly distributed across players. We apply our findings to the analysis of homophily in communities, to organization design, and to the study of endogenous network formation. Communication across communities decreases as communities become larger, and communication may be asymmetric: From large communities to small ones. In our set up, fully decentralized organizations maximize all players’ welfare. Further, decentralized networks, where information may flow asymmetrically, endogenously form in equilibrium. Finally, we introduce the possibility of public communication in networks, and identify conditions under which public communication Pareto dominates private communication.
    Date: 2009–05–28
  3. By: Skoufias, Emmanuel; Lunde, Trine; Patrinos, Harry Anthony
    Abstract: This paper examines the extent to which social networks among indigenous peoples have a significant effect on a variety of human capital investment and economic activities, such as school attendance and work among teenage boys and girls, and migration, welfare participation, employment status, occupation and sector of employment among adult males and females. The analysis uses data from the 10 percent population sample of the 2000 Population and Housing Census of Mexico and an empirical strategy that allows taking into account the role of municipality and language group fixed effects. The authors confirm empirically that social network effects play an important role in the economic decisions of indigenous people, especially in rural areas. The analysis also provides evidence that better access to basic services, such as water and electricity, increases the size and strength of network effects in rural areas.
    Keywords: Population Policies,Access to Finance,Anthropology,Labor Policies,Housing&Human Habitats
    Date: 2009–06–01
  4. By: Baum, Joel (Rotman School of Management, University of Toronto); Cowan, Robin (UNU-MERIT, Maastricht University); Jonard, Nicolas (Universite du Luxembourg)
    Abstract: Empirical research on strategic alliances has focused on the idea that alliance partners are selected on the basis of social capital considerations. In this paper we emphasize instead the role of complementary knowledge stocks (broadly defined) in partner selection, arguing not only that knowledge complementarity should not be overlooked, but that is may be the true causal force behind alliance formation. To marshal evidence on this point, we design a simple model of partner selection in which firms ally for the purpose if learning and innovating, and in doing so create an industry network. We abstract completely from network-based structural and strategic motives for partner selection and focus instead on the idea that firms' knowledge bases must "fit" in order for joint learning and innovation to be possible, and thus for an alliance to be feasible. The striking result is what while containing no social capital considerations, the simple model replicates the firm conduct, network structure, and contingent effects of network position on performance observed and discussed in the empirical literature.
    Keywords: Network formation and dynamics, Innovation, Knowledge, Alliances
    JEL: D85 D24 L14 L24 O33
    Date: 2009
  5. By: Blair Schaeffer
    Date: 2009–06–08
  6. By: Migheli, Matteo
    Abstract: The link between individual religiosity and happiness has been studied with respect to different aspects. The general conclusion is that religiosity helps people to feel happier. However the extant studies have never taken into account how belonging to a discriminated religious group in a tense environment affects happiness. This paper analyzes this in India, a multireligious country, characterized by religious conflicts. The results show that membership to a discriminated group is source of unhappiness provided that the group represents a minority in a specific territory. Instead, when a religious community is a minority in the country, but it is represents the majority of the population in some specific region(s) membership to it increases individual's happiness. A religiousbased federalism could appease the conflicts and increase people's happiness.
    Keywords: happiness, India, religious denominations, conflict, discrimination
    JEL: D01 D69 Z12
    Date: 2009–05
  7. By: Roland Pongou; Roberto Serrano
    Abstract: We study the dynamic stability of fidelity networks, which are networks that form in a mating economy of agents of two types (say men and women), where each agent desires direct links with opposite type agents, while engaging in multiple partnerships is considered an act of infidelity. Infidelity is punished more severely for women than for men. We consider two stochastic processes in which agents form and sever links over time based on the reward from doing so, but may also take non-beneficial actions with small probability. In the first process, an agent who invests more time in a relationship makes it stronger and harder to break by his/her partner; in the second, such an agent is perceived as weak. Under the first process, only egalitarian pairwise stable networks (in which all agents have the same number of partners) are visited in the long run, while under the second, only anti-egalitarian pairwise stable networks (in which all women are matched to a small number of men) are. Next, we apply these results to find that under the first process, HIV/AIDS is equally prevalent among men and women, while under the second, women bear a greater burden. The key message is that anti-female discrimination does not necessarily lead to higher HIV/AIDS prevalence among women in the short run, but it does in the long run.
    Keywords: Fidelity networks; anti-female discrimination; stochastic stability; HIV/AIDS; union formationmodels
    Date: 2009
  8. By: Mueller, Rolf A.E.; Buergelt, Doreen; Seidel-Lass, Linda
    Abstract: Judged by its currency, the supply chain is one of the more successful metaphors in economics. The metaphor borrows from mechanics the idea of the chain, that is something that consists of elements that are linked to each of their two immediate neighbors and which jointly provide a strong but flexible connection. The metaphor transplants the chain-idea into the sphere of economics where, before the introduction of supply chains, chains were, for most economists, things best left in the care of ironmongers. More than twenty years after its introduction the "supply chain"-metaphor appears to be losing its luster and a competition is underway in the literature where authors forge complicated arguments in support of metaphors which recognize that supply chains are not really linear chains but most often expansive networks (e.g. Lazzarini et al. 2001). For this reason the chief contenders for the pride of place seem to be neologisms such as "supply networks" or "net chains". It is not obvious to us that much will be gained by replacing chain-metaphors with network-metaphors. Few practitioners of procurement, logistics and marketing will have failed to notice that not all business arrangements are strictly chain-like and only the most unperceiving will be enlightened by the new network-metaphors. Because supply chains obviously are networks, chances are that network-metaphors will win many converts, at least for some time.
    Keywords: Agribusiness, Agricultural and Food Policy, Farm Management, Food Consumption/Nutrition/Food Safety, Industrial Organization,
    Date: 2008–10

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