nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2010‒09‒03
eleven papers chosen by
Fabio Sabatini
Euricse and University of Trento

  1. Altruistic Behavior and Habit Formation By Harvey S. Rosen; Stephen T. Sims
  2. The Social Capital of Venture Capitalists and Its Impact on the Funding of Start-Up Firms By Alexy, O.; Block, J.H.; Sandner, P.G.; Wal, A.L.J. Ter
  3. Cooperative Strategies in Groups of Strangers: An Experiment By Gabriele Camera; Marco Casari; Maria Bigoni
  4. Golden Balls: A Prisoner’s Dilemma Experiment By Donja Darai; Silvia Grätz
  5. Communication, Commitment, and Deception in Social Dilemmas: Experimental Evidence By Gabriele Camera; Marco Casari; Maria Bigoni
  6. Endogenous Group Formation via Unproductive Costs By Jason Aimone; Laurence R. Iannaccone; Michael D. Makowsky
  7. The Coordination Value of Monetary Exchange: Experimental Evidence By Gabriele Camera; Marco Casari
  8. Corporate Social Responsibility in Large Family and Founder Firms By Block, J.H.; Wagner, M.
  9. Altruism, Education Subsidy and Growth By Mauricio Armellini; Parantap Basu
  10. State-Society Relations and Intangible Dimensions of State Resilience and State Building: A Bottom-Up Perspective By Béatrice Pouligny
  11. Elites and Institutional Persistence By Robinson, James A.

  1. By: Harvey S. Rosen (Princeton University); Stephen T. Sims (STS Associates)
    Abstract: This paper examines whether altruistic behavior is habit forming. We take advantage of a data set that includes a rich set of information concerning individuals’ donations of cash and time as adults as well as information about whether they were involved with charitable activities when they were young. The basic premise is that if altruistic behavior when young is a good predictor of such behavior in adulthood, then this is consistent with the notion that altruistic behavior is habit forming. Using U.S. data, we examine both donations of money and time, and find that engaging in charitable behavior when young is a strong predictor of adult altruistic behavior, ceteris paribus. A major issue in the interpretation of this result is that the correlation between youthful and adult altruistic behavior may be due to some third variable that affects both. While it is impossible to rule out such a possibility, we are able to control for family influences that likely could affect lifetime attitudes toward altruism. We find that, even taking this factor into account, altruistic behavior as a youth plays a significant role in explaining adult behavior. This result applies to donations of money and time to a variety of types of non-profit organizations.
    Keywords: altruistic behavior, donations, nonprofit fundraising
    JEL: D19 D83 L31
    Date: 2010–07
  2. By: Alexy, O.; Block, J.H.; Sandner, P.G.; Wal, A.L.J. Ter
    Abstract: How does the social capital of venture capitalists (VCs) affect the funding of start-ups? Extant entrepreneurship literature conceptualizes a substitute effect between the social and financial capital that new firms attain from their investors. On the contrary, by building on the rich social capital literature, we hypothesize a positive effect of VCs’ social capital, derived from past syndication, on the amount of money that start-ups receive. Specifically, we argue that both structural aspects of VCs’ social network, such as the number of connections and the spanning of structural holes, and relational aspects, such as the diversity of network partners’ attributes, provide VCs with superior access to information about current investment objects and opportunities to leverage them in the future, increasing their willingness to invest in these firms. Our empirical results, derived from a novel dataset containing more than 5,000 funding rounds in the Internet and IT sector, strongly confirm our hypotheses. Both structural and relational attributes of VCs’ syndication networks have a significant influence on the funds received by start-up firms, highlighting the importance of a social capital perspective on new venture funding. We discuss the implications of our findings for theories of venture capital and entrepreneurship, showing that the role and effect of VCs’ social capital on start-up firms is much more complex than previously argued in the literature.
    Keywords: venture capital;social capital;start-ups;social networks;structural holes
    Date: 2010–06–26
  3. By: Gabriele Camera; Marco Casari; Maria Bigoni
    Abstract: We study cooperation in four-person economies of indefinite duration. Subjects interact anonymously playing a prisoner’s dilemma. We identify and characterize the strategies employed at the aggregate and at the individual level. We find that (i) grim trigger well describes aggregate play, but not individual play; (ii) individual behavior is persistently heterogeneous; (iii) coordination on cooperative strategies does not improve with experience; (iv) systematic defection does not crowd-out systematic cooperation.
    Keywords: repeated games, equilibrium selection, prisoners’ dilemma, random matching
    JEL: C90 C70 D80
    Date: 2010–06
  4. By: Donja Darai (Socioeconomic Institute, University of Zurich); Silvia Grätz (Socioeconomic Institute, University of Zurich)
    Abstract: We analyze cooperative behavior in a prisoner's dilemma game with high stakes, face-to-face communication, and two rounds of pre-play in which the two final contestants are endogenously selected via a voting process. Using data from the British television game show "Golden Balls", we find a unilateral cooperation rate of 55% and a mutual cooperation rate of 33%. The stake size is on average $13,300 and ranges from $3 to $100,150. Our analysis shows that both stake size and communication have a significant impact on the player's likelihood to cooperate. In particular, we observe a negative correlation between stake size and cooperation. Also certain gestures, as handshakes, decrease the likelihood to cooperate. But, if players mutually promise each other to cooperate and in addition shake hands on it, the cooperation rate increases. We also show that a player's expectation about the stake size matters. Further, we find a strong link between contestant's pre-play behavior and the outcome of the prisoner's dilemma. Players who contribute more to the stake size are less likely to cooperate, even though each player's contribution is determined by a random process. Apart from that, it matters whether a player has lied in the pre-play and whether she experienced her opponent's goodwill. Addressing the partner selection process, we find that contestant's voting decisions are based on objective criteria, i.e., their opponent's monetary contribution to the stake size, as well as subjective personal characteristics, i.e., the opponents' trustworthiness.
    Keywords: prisoner's dilemma, cooperative behavior, communication, promises, voting
    JEL: C72 C93 H41
    Date: 2010–07
  5. By: Gabriele Camera; Marco Casari; Maria Bigoni
    Abstract: Social norms of cooperation are studied under several forms of communication. In an experiment, strangers could make public statements before playing a prisoner’s dilemma. The interaction was repeated indefinitely, which generated multiple equilibria. Communication could be used as a tool to either signal intentions to coordinate on Pareto-superior outcomes, to deceive others, or to credibly commit to actions. Some forms of communication did not promote the incidence of efficient Nash play, and sometimes reduced it. Surprisingly, cooperation suffered when subjects could publicly commit to actions.
    Keywords: coordination, cheap-talk, deception, indefinitely repeated game, social norms
    JEL: C90 C70 D80
    Date: 2010–07
  6. By: Jason Aimone (George Mason University); Laurence R. Iannaccone (Chapman University); Michael D. Makowsky (Department of Economics, Towson University)
    Abstract: How and why do groups form? In many cases, group formation is endogenous to the actions that individual members take and the norms associated with these actions. In this paper, we conduct an experiment that allows groups to form endogenously in the context of the classic voluntary contribution mechanism public goods game. We identify unproductive costs – “sacrifice” – as a mechanism for endogenous group formation, a result which is consistent with the “sacrifice and stigma” theory of religious groups. We find that changes in relative prices (between private and public goods) act to screen out free-riders, subjects who choose high-sacrifice groups contribute more to the public good once in these groups, and moderate welfare gains are available to those who voluntarily incur unproductive costs.
    Keywords: Endogenous Group Formation, Laboratory Experiment, Free Riding, Public Goods Game, Voluntary Contribution Mechanism, Sacrifice, Unproductive Costs.
    JEL: C92 D71 H41 Z12
    Date: 2010–08
  7. By: Gabriele Camera; Marco Casari
    Abstract: A new behavioral foundation is uncovered for why money promotes impersonal exchange. In an experiment, subjects could cooperate by intertemporally exchanging goods with anonymous opponents met at random. Indefinite repetition supported multiple equilibria, from full defection to the efficient outcome. Introducing the possibility to hold and exchange intrinsically worthless tickets affected outcomes and cooperation patterns. Tickets resembled fiat money, which emerged as a tool for equilibrium selection in the economy. Monetary exchange facilitated coordination on cooperation and redistributed surplus from defectors to cooperators. Treatments where subjects could develop a reputation revealed a limited record-keeping role for monetary exchange.
    Keywords: money, cooperation, information, trust, folk theorem, repeated games
    JEL: C90 C70 D80
    Date: 2010–08
  8. By: Block, J.H.; Wagner, M.
    Abstract: Based on arguments about long-term orientation and corporate reputation, we argue that family and founder firms differ from other firms with regard to corporate social responsibility. Using Bayesian analysis, we then show that family and founder ownership are associated with a lower level of corporate social responsibility concerns, whereas ownership by institutional investors is associated with a higher level of corporate social responsibility concerns and a lower level of corporate social responsibility initiatives. We conclude that it makes sense to distinguish between family, founder and institutional investors and their roles as owners or managers when analyzing the effects of corporate governance on corporate social responsibility.
    Keywords: family firms;corporate social responsibility;founder firms;family ownership;family management;long-term orientation
    Date: 2010–06–26
  9. By: Mauricio Armellini; Parantap Basu
    Abstract: An optimal education subsidy formula is derived using an overlapping generations model with parental altruism. The model predicts that public education subsidy is greater in economies with lesser parental altruism because a benevolent government has to compensate for the shortfall in private education spending of less altruistic parents with a finite life. On the other hand, growth is higher in economies with greater parental altruism. Cross-country regressions using the World Values Survey for altruism lend support to our model predictions. The model provides insights about the reasons for higher education subsidy in richer countries.
    Keywords: Altrusim, Education Subsidy, Human Capital, Growth.
    JEL: D9
    Date: 2010–08–21
  10. By: Béatrice Pouligny
    Abstract: Crucial social and cultural elements underpin state institutions and ensure that they function. This is true in any context, but it is even more important to understand and truly acknowledge in “fragile” ones. Conventional perspectives need to be broadened and need to look at the multiplicity and diversity of political institutions (formal and in-formal), cultures and logics through which state resilience and state-building processes may be supported. Such an approach would help re-integrate the “intangible” dimensions that constitute the substantive content of institutions, their ethos, beyond their mere forms. Based upon concrete experiences in different African countries, this paper explains what these intangible dimensions are in three of the sectors usually concerned with reforms (politics, justice and security), and why they are important and should be better integrated in analyses, intervention strategies and aid programmes. An equally important dimension of such integration is that it would also allow better consideration of local capacities and resources to be taken, in particular in terms of resilience, and would allow it to go beyond the impression of “vacuum” or “chaos” too often given to situations of fragility. Finally, the paper presents some concrete recommendations to integrate these dimensions better into the priorities and modalities of European aid, as well as suggest a few avenues for further research on the subject.
    Keywords: fragility, resilience, state building, institutions, traditions, cultures
    Date: 2010–05–05
  11. By: Robinson, James A.
    Abstract: Particular sets of institutions, once they become established in a society, have a strong tendency to persist. In this paper I argue that understanding how elites form and reproduce is key to understanding the persistence of institutions over time. I illustrate this idea with a simple political economy theory of institutions and through examples from Liberia, the US, South Africa and Germany I show how elites influence institutions. To change institutions requires having an understanding of how reforms influence the preferences, capabilities and strategies of elites.
    Keywords: elites, political economy, persistence of institutions
    Date: 2010

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