nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2009‒07‒03
sixteen papers chosen by
Fabio Sabatini
University of Siena

  1. Are Happier People Better Citizens? By Cahit Guven
  2. Is Behavioral Economics Doomed? By David K Levine
  3. Voting Motives, Group Identity, and Social Norms By Carlsson, Fredrik; Johansson-Stenman, Olof
  4. Network Formations among Immigrants and Natives By Epstein, Gil S.; Heizler (Cohen), Odelia
  5. Engineering Trust - Reciprocity in the Production of Reputation Information By Gary E. Bolton; Ben Greiner; Axel Ockenfels
  6. Building Trust One Gift at a Time By Maroš Servátka;; Steven Tucker; Radovan Vadovic
  7. Crime and Sport Participation in Itay: Evidence from Panel Data Regional Analysis over the Period 1997-2003.\ By Raul Caruso
  8. Trust and Reciprocity among International Groups: Experimental Evidence from Austria and Japan By Kenju Akai; Robert J. Netzer
  9. The Impact of Social Value Orientation and Risk Attitudes on Trust and Reciprocity By Kiridaran Kanagaretnam; Stuart Mestelman; Khalid Nainar; Mohamed Shehata
  10. Trust and Reciprocity with Transparency and Repeated Interactions By Kiridaran Kanagaretnam; Stuart Mestelman; S.M.Khalid Nainar; Mohamed Shehata
  11. Regulation and Distrust By Philippe Aghion; Yann Algan; Pierre Cahuc; Andrei Shleifer
  12. Network-independent partner selection and the evolution of innovation networks. By Joel BAUM; Robin COWAN; Nicolas JONARD
  13. The Role of Social Capital in the Adoption of Firewood Efficient Stoves in the Northern Peruvian Andes By Agurto Adrianzen, Marcos
  14. Group versus Individual Liability: Long Term Evidence from Philippine Microcredit Lending Groups By Xavier Giné; Dean Karlan
  15. The Interaction between Explicit and Relational Incentives: An Experiment By Randolph Sloof; Joep Sonnemans
  16. A Missing Link in Behavioural Economics? A Portmanteau Experiment on the Relevance of Individual Decision Anomalies for Households. By Alistair Munro; Danail Popov

  1. By: Cahit Guven
    Abstract: This paper presents evidence on causal influence of happiness on social capital and trust using German Socio-Economic Panel. Exploiting the unexplained cross-sectional variation in individual happiness (residuals) in 1984 to eliminate the endogeneity problem, the paper finds that happier people trust others more, and importantly, help create more social capital. Specifically, they have a higher desire to vote, perform more volunteer work, and more frequently participate in public activities. They also have a higher respect for law and order, hold more association memberships, are more attached to their neighborhood, and extend more help to others. Residual happiness appears to be an indicator of optimism, and has an inverse U-shaped relationship with social capital measures. The findings also suggest that the relationship between happiness and social capital strengthened in the world in the last decade.
    Keywords: happiness, trust, social capital, optimism
    JEL: Z13
    Date: 2009
  2. By: David K Levine
    Date: 2009–06–20
  3. By: Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University); Johansson-Stenman, Olof (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: The conventional rational voter model has problems explaining why people vote, since the costs typically exceed the expected benefits. This paper presents Swedish survey evidence suggesting that people vote based on a combination of instrumental and expressive motives, and that people are strongly influenced by a social norm saying that it is an obligation to vote. Women and older individuals are more affected by this norm than others. The more rightwing a person is, the less unethical he/she will perceive selfish voting to be. Moreover, individuals believe that they themselves vote less selfishly than others and that people with similar political views as themselves vote less selfishly than people with the opposite political views, which is consistent with social identity theory.<p>
    Keywords: social norms; self-interested voting; expressive voting; sociotropic voting; selfserving bias; group identity; in-group bias; social identity theory
    JEL: D70 D72
    Date: 2009–06–17
  4. By: Epstein, Gil S. (Bar-Ilan University); Heizler (Cohen), Odelia (Hebrew University, Jerusalem)
    Abstract: In this paper we examine possible network formations among immigrants and natives with endogenous investment. We consider a model of a network formation where the initiator of the link bears its cost while both agents benefit from it. We present the model by considering possible interactions between immigrants and the new society in the host country: assimilation, separation, integration and marginalization. The paper highlights different aspects of immigrants’ behavior and their interaction with the members of the host country (society) and their source country (society). We found that when the stock of the immigrants in the host country increases, the immigrants' investment in the middlemen increases and the natives may bear the cost of link formation with the middlemen.
    Keywords: assimilation and separation, social networks, network formations
    JEL: D85 J15 F22 A14
    Date: 2009–06
  5. By: Gary E. Bolton (Department of Supply Chain & Information Systems, Pennsylvania State University); Ben Greiner (School of Economics, The University of New South Wales); Axel Ockenfels (Department of Economics, University of Cologne)
    Abstract: Reciprocal feedback distorts the production and content of reputation information, hampering trust and trade efficiency. Data from eBay and other sources combined with laboratory data provide a robust picture of how reciprocity can be guided by changes in the way feedback information flows through the system, leading to more accurate reputation information, more trust and more efficient trade.
    Keywords: market design; reputation; trust; reciprocity; eBay
    JEL: C73 C9 D02 L14
    Date: 2009–03
  6. By: Maroš Servátka; (University of Canterbury); Steven Tucker (University of Canterbury); Radovan Vadovic
    Abstract: This paper reports an experiment evaluating the effect of gift giving on building trust in a relationship. We have nested our explorations in the standard version of the investment game. Our gift treatment includes a dictator stage in which the trustee decides whether to give a gift to the trustor before both of them proceed to play the investment game. We observe that in such case the majority of trustees offer their endowment to trustors. Consequently, receiving a gift significantly increases the amounts sent by trustors when controlling for the differences in payoffs created by it. Trustees are, however, not better off by giving a gift as the increase in the amount sent by trustors is not large enough to offset the trustees’ loss associated with the cost of giving a gift. Our results indicate that a relationship which is initiated by gift giving leads to higher trust and efficiency but at the same time is probably not stable.
    Keywords: Experimental economics; gift; investment game; trust; trustworthiness
    JEL: C70 C90
    Date: 2009–06–17
  7. By: Raul Caruso (Institute of Economic Policy, Università Cattolica del Sacro Cuore di Milano)
    Abstract: What is the broad impact of sport participation and sport activities in a society? The first aim of this paper is tackling this crucial point by studying whether or not there is a relationship between sport participation and crime. A panel dataset have been constructed for the twenty Italian regions over the period 1997-2003. The impact of spot participation on different type of crimes has been studied. Results show that: (i) there is a robust negative association between sport participation and property crime; (ii) There is a robust negative association between sport participation and juvenile crime; (iii) There is a positive association between sport participation and violent crime, but it is only weakly significant.
    Keywords: Sport participation, relational goods, crime
    JEL: L83 D62
    Date: 2009–06
  8. By: Kenju Akai; Robert J. Netzer
    Abstract: This paper aimed to compare the trust and reciprocity levels among international groups by adopting a modified trust game played among groups from Austria and Japan. Our results were as follows: (i) When the groups interacted intranationally, the trust and reciprocity levels among the Austrian and Japanese groups were identical. (ii) When they interacted internationally, the groups tended to display the same trust levels, and the Japanese groups tended to reciprocate more than the Austrian groups as the trust levels of their respective interacting group increased. These results suggest that a heterolytic group norm exists across nationalities. In other words, the trust between groups is identical across nationality, whereas reciprocity between groups differs. The fact that the Japanese display less in-group favoritism only in terms of reciprocity has an important implication in terms of a comparative analysis of group norms, not only between the EU and Japan but also between individualism and collectivism in larger sense.
    Date: 2009–05
  9. By: Kiridaran Kanagaretnam; Stuart Mestelman; Khalid Nainar; Mohamed Shehata
    Abstract: Prior experimental studies provide evidence that the levels of trust and reciprocity are highly susceptible to individuals’ preferences towards payoffs, prior experience, capacity to learn more about personal characteristics of each other and social distance. The objective of this study is to examine whether social value orientation as developed by Griesinger and Livingstone (1973) and Liebrand (1984) and risk preferences can help to account for the variability of trust and trustworthiness. We use the Berg et al. (1995) investment game to generate indices of trust and reciprocity. Prior to their participation in the investment game, all subjects participated in two other games. One is used to measure their social value orientation (a measure of other regarding behavior) and the second to measure risk attitudes. These variables are introduced as treatments in the analysis of the trust and reciprocity data. In addition to these preference related variables, gender is introduced to capture any differences between men and women which may not be encompassed by value orientation and risk attitudes. The statistical analysis indicates that the social value orientation measure significantly accounts for variation in trust and reciprocity. As well, the level of trust exhibited by an investor significantly affects the reciprocity of the responders and this measure of trust interacts with social value orientation. Individuals who are highly pro-social reciprocate more as the sender’s trust increases, while those who are highly pro-self reciprocate less as the sender’s trust increases. For this sample of participants, the gender variable does not capture any differences in the behavior of men and women that is not already reflected by the differences captured by their value orientations. Risk attitudes do not significantly account for variation in trusting behavior, except for the case where individuals have neither strongly pro-social nor pro-self social value orientations. In this case, more riskseeking individuals are more trusting.
    Keywords: Trust, Reciprocity, Social Value Orientation, Risk Attitudes, Gender
    JEL: C92 D81 Z13
    Date: 2009–05
  10. By: Kiridaran Kanagaretnam; Stuart Mestelman; S.M.Khalid Nainar; Mohamed Shehata
    Abstract: This paper uses data from a controlled laboratory environment to study the impact of transparency (i.e., complete information versus incomplete information) and repeated interactions on the level of trust and trustworthiness in an investment game setting. The key findings of the study are that transparency (complete information) significantly increases trusting behavior in one-shot interactions. This result persists in repeated interactions. Further, transparency appears important for trustworthiness in one-shot interactions. In addition, repeated interaction increases trust and reciprocity with or without transparency. These results suggest transparency is important in building trust in business environments such as alliances and joint-ventures which are loosely connected organizational forms that bring together otherwise independent firms. It also provides support for the Sarbanes-Oxley Act of 2002 (SOX) and similar legislation elsewhere which attempt to regain investors’ trust in corporate management and financial markets by stipulating enhanced disclosures.
    Keywords: Transparency; Trust; Reciprocity; Repeated interaction; Business Alliances; SOX
    JEL: C70 C91 D63 D81 D82
    Date: 2009–05
  11. By: Philippe Aghion (Department of Economics, Harvard University - (-)); Yann Algan (Sciences Po, OFCE - Commencez à saisir le nom d'un établissement); Pierre Cahuc (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X); Andrei Shleifer (Department of Economics, Harvard University - (-))
    Abstract: In a cross-section of countries, government regulation is strongly negatively correlated with social capital. We document this correlation, and present a model explaining it. In the model, distrust creates public demand for regulation, while regulation in turn discourages social capital accumulation, leading to multiple equilibria. A key implication of the model is that individuals in low trust countries want more government intervention even though the government is corrupt. We test this and other implications of the model using country- and individual-level data on social capital and beliefs about government's role, as well as on changes in beliefs and in trust during the transition from socialism.
    Date: 2009–06–17
  12. By: Joel BAUM; Robin COWAN; Nicolas JONARD
    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 it 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 of 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 leaning and innovation to be possible, and thus for an alliance to be feasible. The striking result is that while containing no social capital considerations, this simple model replicates the firm conduct, network structure, and contingent effects of network position on performance observed and discussed in the empirical literature.
    Date: 2009
  13. By: Agurto Adrianzen, Marcos
    Abstract: This paper explores rural households’ adoption of a new cooking technology in the Northern Peruvian Andes. It exploits a development intervention which distributed and installed, at no cost, firewood efficient stoves in the rural communities of Chalaco District. Using first hand data, collected from the beneficiary villages, this research investigates how village technology adoption patterns and village social capital mutually interact and influence the individual household’s adoption decision. The results in this paper indicate that the effect of village adoption patterns on the household’s adoption decision is significantly higher in villages with stronger social capital and that the marginal impact of social capital may be negative if village success in adoption is relatively low. It is also shown that only the proportion of adopters that did not experience problems with their own stoves has a positive impact on individual household adoption through its interaction with social capital, while the reverse is true for the village proportion of adopters experiencing problems with the new cooking technology. In this study measures of social capital were collected prior to the intervention; therefore, reverse causality should not be a critical issue in identifying the effects of this social variable. Village unobservable factors are not likely to drive the observed patterns in the data; this paper also shows that village success in adoption has a negative effect on the decision to uninstall the stove among beneficiary non users and that this effect is also increasing in village social capital. The results point to the importance of village social structures in the success of development interventions.
    Keywords: social capita / social learning / technology adoption / firewood stoves
    JEL: Q55 O33 D83 O12
    Date: 2009–06
  14. By: Xavier Giné (World Bank); Dean Karlan (Economic Growth Center, Yale University)
    Abstract: Group liability in microcredit purports to improve repayment rates through peer screening, monitoring, and enforcement. However, it may create excessive pressure, and discourage reliable clients from borrowing. Two randomized trials tested the overall effect, as well as specific mechanisms. The first removed group liability from pre-existing groups and the second randomly assigned villages to either group or individual liability loans. In both, groups still held weekly meetings. We find no increase in default and larger groups after three years in pre-existing areas, and no change in default but fewer groups created after two years in the expansion areas.
    Keywords: microfinance, group lending, group liability, joint liability, social capital, micro-enterprises, informal economies, access to finance
    JEL: C93 D71 D82 D91 G21 O12 O16 O17
    Date: 2009–01
  15. By: Randolph Sloof (University of Amsterdam); Joep Sonnemans (University of Amsterdam)
    Abstract: We consider repeated trust game experiments to study the interplay between explicit and relational incentives. After having gained experience with two payoff variations of the trust game, subjects in the final part explicitly choose which of these two variants to play. Theory predicts that subjects will choose the payoff dominated game (representing a bad explicit contract), because this game better sustains (implicit) relational incentives backed by either reputational or reciprocity considerations. We also explicitly test how game choice is affected by the length of the repeated game.
    Keywords: relational contracts; explicit incentives; crowding out; experiments
    JEL: C91 M52 J41
    Date: 2009–04–14
  16. By: Alistair Munro (National Graduate Institute for Policy Studies, Tokyo, Japan); Danail Popov (Department of Economics, Royal Holloway University of London)
    Abstract: Although households are responsible for many important decisions, they have rarely been the subject of economics experiments. We conduct a series of linked and incentivized experiments on decision-making, designed to see if the anomalies typically found in individual choice experiments are found when the subjects are couples from long-term relationships. Specifically we investigate the endowment effect, the compromise effect, asymmetric dominance and the ‘more is less’ phenomena. Comparing the results with two control groups (students and non-student individuals) we find broadly the same pattern of anomalies in individuals as we do in couples. Thus behavioural patterns that appear in individual choices appear relevant for decisions made by established couples.
    Keywords: Household choice, Experiment, Family, Anomalies, Endowment Effect, Compromise Effect, Asymmetric Dominance, ‘More is less’.
    JEL: C92 D13 D80
    Date: 2009–06

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