nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2010‒11‒06
twelve papers chosen by
Fabio Sabatini

  1. Social Norms and Economic Incentives in Firms By Huck, Steffen; Kübler, Dorothea; Weibull, Jörgen
  2. Homeownership and investment for social capital in Japan: Dynamic Panel approach. By Yamamura, Eiji
  3. Trust me, it is High Trust: On Trust and its Measurement By Christian Lukas; Peter Walgenbach
  4. Diffusion of Innovations on Community Based Small Worlds: the Role of Correlation between Social Spheres By Emily Tanimura
  5. Marketing via Friends: Strategic Diffusion of Information in Social Networks with Homophily By Roman Chuhay
  6. Information, Stability and Dynamics in Networks under Institutional Constraints By Norma Olaizola; Federico Valenciano
  7. Gender, Social Norms and Household Production in Burkina Faso. By Harounan Kanzianga; Zaki Wahhaj
  8. The Survival of the Conformist: Social Pressure and Renewable Resource Management By Alessandro Tavoni; Maja Schlüter; Simon Levin
  9. Non-collusive Corruption: Theory and Evidence from Education Sector in Bangladesh By Ratbek Dzumashev; Asadul Islam; Zakir H. Khan
  10. Trust and the Choice Between Housing and Financial Assets: Evidence from Spanish Households By El-Attar, Mayssun; Poschke, Markus
  11. Crime and Education in a Model of Information Transmission By Darwin Cortés; Guido Friebel; Darío Maldonado
  12. Strategic Niche Management of Social Innovations: the Case of Social Entrepreneurship By Marten J. Witkamp; Rob P. J. M. Raven; Lambèr M. M. Royakkers

  1. By: Huck, Steffen (University College London); Kübler, Dorothea (WZB - Social Science Research Center Berlin); Weibull, Jörgen (Stockholm School of Economics)
    Abstract: This paper studies the interplay between economic incentives and social norms in firms. We introduce a general framework to model social norms arguing that norms stem from agents’ desire for, or peer pressure towards, social efficiency. In a simple model of team production we examine the interplay of different types of contracts with social norms. We show that one and the same norm can be output-increasing, neutral, or output-decreasing depending on the incentive scheme. We also show how social norms can induce multiplicity of equilibria and how steeper economic incentives can reduce effort.
    Keywords: social norms, incentives, contracts
    JEL: D23
    Date: 2010–10
  2. By: Yamamura, Eiji
    Abstract: This paper explores how the rate of home-ownership and income inequality are related to the formation of social capital using panel data from Japan during the period 19862006. I have used Dynamic Panel estimation to control unobserved prefecture-specific fixed effects and an endogeneity bias. I have found through this estimation that the rate of home-ownership enhances the participation in voluntary activities, leading to social capital accumulation. This is in accord with findings from the United States (DiPasquale and Glaeser, 1999).
    Keywords: Social Capital; home-ownership; length of residency
    JEL: D71 R11 R23
    Date: 2010–10–10
  3. By: Christian Lukas (Department of Economics, University of Konstanz, Germany); Peter Walgenbach (School of Economics and Business Administration, Friedrich Schiller University of Jena, Germany)
    Abstract: As the positive impact of trust on business success is widely undisputed, the question of how to measure trust naturally arises. Both expectations of trustworthy behavior and possible gains and losses from a trusting relationship influence the level of trust between two parties or individuals. This paper explores whether an exchange featuring (almost) equal expected gains and expected losses for a trusting individual is evidence for high trust or low trusts; we argue that such an exchange tends to display low trust. A simple trust measure is suggested that can be applied both in experimental and analytical research.
    Keywords: trust, trust measurement, trust as behavior, agency theory, behaviroal game theory, investment game
    JEL: D6 M5
    Date: 2010–10–29
  4. By: Emily Tanimura (Université Paris 1 Panthéon-la Sorbonne-CNRS)
    Abstract: Which types of networks favor the diffusion of innovations in the sense that an innovation whose intrinsic benefits are greater than those of an established choice will be able to replace the latter when it is initially used only by a small fraction of a large population? For deterministic and regular networks there are characterizations, based on a coordination game model of the diffusion of innovations. Here we study this question for a class of irregular random networks, Small world networks, which are of interest as more realistic models of social networks. We consider a random graph model based on a community structure, in which the choice of a parameter allows us to obtain as special cases several well known models, in particular Watts' Small world. We show that there are different types of Small World graphs some which favor diffusion, others that do not. Our study suggests that the kinds of ties that exist between different communities of an individual play an important role. We interpret Watts' Small World as one with high correlation between social spheres of individuals and favorable to diffusion. In other Small Worlds where the communities of individuals are uncorrelated diffusion succeeds only for very large payoff benefits in favor of the innovation.
    Keywords: Diffiusion of innovations, Small World Networks, Contagion Threshold, Community Structure, Social Networks
    JEL: D85
    Date: 2010–10
  5. By: Roman Chuhay (University of Alicante)
    Abstract: The paper studies the impact of homophily on the optimal strategies of a monopolist, whose marketing campaign of new product relies on a word of mouth communication. Homophily is a tendency of people to interact more with those who are similar to them. In the model there are two types of consumers embedded into a social network, which differ in friendship preferences and desirable design of product. Consumers can learn about the product directly from an advertisement or from their neighbors. The monopolist chooses the product design and price to influence a pattern of communication among consumers. We find a number of results: (i) for low levels of homophily the product attractive to both types of consumers is preferred to specialized products; (ii) the price elasticity is increasing in homophily; (iii) an increase in the homophily benefits both the monopolist and consumers; and (iv) the product attractive to both types may be optimal even if the monopolist obtains profits only from sales to one type of consumers.
    Keywords: Networks, Word of Mouth, Viral Marketing, Homophily, Diffusion, Social Networks, Random Graphs, Monopoly, Pricing Strategy, Product Design, Marketing, Advertisement
    JEL: D21 D42 D60 D83 L11 L12
    Date: 2010–09
  6. By: Norma Olaizola (Universidad del País Vasco); Federico Valenciano (Universidad del País Vasco)
    Abstract: In this paper we study the effects of institutional constraints on stability, efficiency and network formation. More precisely, an exogenous "societal cover" consisting of a collection of possibly overlapping subsets that covers the whole set of players and such that no set in this collection is contained in another specifies the social organization in different groups or "societies". It is assumed that a player may initiate links only with players that belong to at least one society that s/he also belongs to, thus restricting the feasible strategies and networks. In this way only the players in the possibly empty "societal core", i.e., those that belong to all societies, may initiate links with all individuals. In this setting the part of the current network within each connected component of the cover is assumed to be common knowledge to all players in that component. Based on this two-ingredient model, network and societal cover, we examine the impact of societal constraints on stable/efficient architectures and on dynamics.
    Keywords: Network, Non-cooperative Game, Dynamics
    JEL: C72
    Date: 2010–10
  7. By: Harounan Kanzianga; Zaki Wahhaj
    Abstract: Empirical studies of intra-household allocation has revealed that, in many instances, gender is an important determinant in the allocation of resources within the household. Yet, within the theoretical literature, why gender matters within the household remains an open question. In this paper, we propose a simple model of intra-household allocation based on a particular social institution for the organisation of agricultural production practised among certain ethnic groups in West Africa. We highlight how this institution, while resolving certain problems of commitment and informational asymmetry, can also lead to a gendered pattern in the allocation of productive resources and consumption within the household. Using a survey of agricultural households in Burkina Faso, we show, consistent with this theory, that plots owned by the head of the household are farmed more intensively, and achieves higher yields, than plots with similar characteristics owned by other household members. Male and female family members who do not head the household achieve similar yields. We argue that the higher yields achieved by the household head may be explained in terms of social norms that require him to spend the earnings from some plots under his control exclusively on household public goods, which in turn provides other family members the incentive to voluntarily contribute labour on his farms. Using expenditures data, and measures of rainfall to capture weather-related shocks to agricultural income, we show that the household head has, indeed, a higher marginal propensity to spend on household public goods than other household members. The fact that the head of the household is usually male accounts for the gendered pattern in labour allocation and yields across different farm plots.
    JEL: O12 D13 Q1
    Date: 2010
  8. By: Alessandro Tavoni (Advanced School of Economics at the University of Venice); Maja Schlüter (Leibniz-Institute of Freshwater Ecology and Inland Fisheries); Simon Levin (Department of Ecology and Evolutionary Biology at Princeton University)
    Abstract: This paper examines the role of pro-social behavior as a mechanism for the establishment and maintenance of cooperation in resource use under variable social and environmental conditions. By coupling resource stock dynamics with social dynamics concerning compliance to a social norm prescribing non-excessive resource extraction in a common pool resource (CPR), we show that when reputational considerations matter and a sufficient level of social stigma affects the violators of a norm, sustainable outcomes are achieved. We find large parameter regions where norm-observing and norm-violating types coexist, and analyze to what extent such coexistence depends on the environment.
    Keywords: Cooperation, Social Norm, Ostracism, Common Pool Resource, Evolutionary Game Theory, Replicator Equation, Agent-based Simulation, Coupled Socio-resource Dynamics
    JEL: C73 Q20 D70
    Date: 2010–10
  9. By: Ratbek Dzumashev; Asadul Islam; Zakir H. Khan
    Abstract: We study non-collusive corruption in the education sector. For this purpose, we construct a simple theoretical model that captures non-collusive corruption between service providers (teachers) and service demanders (students). The model shows that the bribe paid by the service demander increases with the level of red tape and her income level, but it decrease with the improvement of the individual’s social status. We also establish that with the increase in the income and the social status of the private agent (networks), the probability of paying bribes and the severity of red tape declines. Then we use a survey data set collected in 2007 by Transparency International Bangladesh, to test the predictions of the model. The estimations confirm that both the probability of being subjected to noncollusive corruption and the cost of corruption is related to the individual characteristics of the bribe payer. Moreover, network connections are an important factor that helps to ease the burden of corruption on private agents, which is also likely ensuring the persistence of this type of corruption.
    Keywords: Education, non-collusive corruption, bribery, Bangladesh
    JEL: K4 O1
    Date: 2010–05
  10. By: El-Attar, Mayssun (McGill University); Poschke, Markus (McGill University)
    Abstract: Trusting behavior has been shown to affect households' portfolio choice between risky and risk-free financial assets. We extend the analysis of the effect of trust on portfolio choice to include the dominant component of households' portfolios, real estate. In a simple model, we show how the effect of trust on expected investment returns affects portfolio composition, including the share of real estate. Using data from the European Social Survey, we estimate individual-level trust as an unobserved attitude using survey questions on personal attitudes by applying a hierarchical item response model. Combining these estimates with data on Spanish households' financial decisions from the Survey of Household Finances (EFF) conducted by the Bank of Spain, we show that households with less trust invest more in housing and less in financial assets, in particular risky ones. Trust thus may drive not only (limited) stock market participation, but financial development more generally.
    Keywords: housing, trust, portfolio choice, item response models
    JEL: D1 D8 Z1
    Date: 2010–10
  11. By: Darwin Cortés (Universidad del Rosario); Guido Friebel (Goethe-Universität); Darío Maldonado (Universidad del Rosario)
    Abstract: We model the decisions of young individuals to stay in school or drop-out and engage in criminal activities. We build on the literature on human capital and crime engagement and use the framework of Banerjee (1993) that assumes that the information needed to engage in crime arrives in the form of a rumor and that individuals update their beliefs about the profitability of crime relative to education. These assumptions allow us to study the effect of social interactions on crime. We first show that a society with fully rational students is less vulnerable to crime than an otherwise identical society with boundedly rational students. We also investigate the spillovers from the actions of talented students to less talented students and show that policies that decrease the cost of education for talented students may increase the vulnerability of less talented students to crime. This is always the case when the heterogeneity of students with respect to talent is sufficiently small.
    Keywords: Human Capital, The Economics of Rumors, Social Interactions, Urban Economics
    JEL: D82 D83 I28
    Date: 2010–10
  12. By: Marten J. Witkamp; Rob P. J. M. Raven; Lambèr M. M. Royakkers
    Abstract: Strategic niche management (SNM), a tool to understand and manage radical socio-technical innovations and facilitate their diffusion, has always departed from a technical artefact. Many radical innovations, however, do not revolve around such an artefact. Social entrepreneurship is a new business model that combines a social goal with a business mentality and is heralded as an important new way to create social value such as sustainability. This study examines if and how SNM can be applied to such a social innovation. It identifies theoretical and practical limitations and proposes solutions. The main conclusion is that SNM can be used to analyse radical social innovation, although it requires rethinking the initial entry point for research and management. Exemplifying quotes are proposed as an alternative. Second, this paper suggests using values to describe niche-regime interaction as a better way to anticipate future niche-regime interactions.
    Keywords: Multi-Level Perspective, Social Entrepreneurship, Social Innovation, Socio-technical Regime, Strategic Niche Management, Value
    Date: 2010–07

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