nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2010‒12‒18
eighteen papers chosen by
Fabio Sabatini

  1. Trust among the Avatars: A Virtual World Experiment, with and without Textual and Visual Cues By Stephen Atlas; Louis Putterman
  2. Are gifts and loans between households voluntary? By Margherita Comola; Marcel Fafchamps
  3. What is the Nature and Social Norm within the Context of In-Group Favouritism? By Harris, D.; Herrmann, B.; Kontoleon, A.
  4. Labor and Grassroots Civic Interests In Regional Institutions By Nesadurai, Helen E.S.
  5. Iterating influence between players in a social network By Michel Grabisch; Agnieszka Rusinowska
  6. The Behavioural Consequences of Unfair Punishment By Michalis Drouvelis
  7. As-if behavioral economics: Neoclassical economics in disguise? By Berg, Nathan; Gigerenzer, Gerd
  8. Behavioral Economics By Berg, Nathan
  9. A structural model of segregation in social networks By Angelo Mele
  10. The determinants of co-inventor tie formation: proximity and network dynamics By Cassi, Lorenzo; Plunket, Anne
  11. Social learning increases the acceptance and the efficiency of punishment institutions in social dilemmas By Gürerk, Özgür
  12. Negotiated Exchange in Social Networks By Michael Lovaglia; John Skvoretz; David Willer; Barry Markovsky
  13. Do Social Enterprises Finance Their Investments Differently from For-proft Firms? By Fedele , Alessandro; Miniaci, Raffaaele
  14. Global Diffusion of the Non-Traditional Banking Model and Alliance Networks: Social Exposure, Learning and Moderating Regulatory Effort By Cuntz, A.N.; Blind, K.
  15. Creditworthiness as a signal of trustworthiness By Becchetti, Leonardo; Conzo, Pierluigi
  16. When Galatea cares about her Reputation: How having Faith in your Workers reduces their Motivation to shine By Jurjen J.A. Kamphorst; Otto H. Swank
  17. Inequality and happiness: When perceived social mobility and economic reality do not match By Christian Bjørnskov; Axel Dreher; Justina A.V. Fischer; Jan Schnellenbach
  18. The creation of internet communities: A brief history of on-line distribution of working papers through NEP, 1998-2010 By Batiz-Lazo, Bernardo; Krichel, Thomas

  1. By: Stephen Atlas; Louis Putterman
    Abstract: We invited “residents” of a virtual world who vary in real-world age and occupation to play a trust game with stakes comparable to “in world” wages. In different treatments, the lab wall was adorned with an emotively suggestive photograph, a suggestive text was added to the instructions, or both a photo and text were added. We find high levels of trust and reciprocity that appear still higher for non-student and older subjects. Variation of results by treatment suggests that both photographic and textual cues influenced the level of trust but not that of trustworthiness.
    Keywords: trust; experiment; internet; virtual world; priming
    Date: 2010
  2. By: Margherita Comola; Marcel Fafchamps
    Abstract: Using village data from Tanzania, we test whether gifts and loans between households are voluntary while correcting for mis-reporting by the giving and receiving households. Two maintained assumptions underlie our analysis: answers to a question on who people would turn to for help are good proxies for willingness to link; and, conditional on regressors, the probability of reporting a gift or loan is independent between giving and receiving households. Building on these assumptions, we develop a new estimation methodology that corrects for response bias. Our testing strategy is based on the idea that, if lending and gift giving are voluntary, then both households should want to rely on each other for help. We find only weak evidence to support bilateral link formation. We do, however, find reasonably strong evidence to support unilateral link formation. Results suggest that if a household wishes to enter in a reciprocal relationship with someone who is sufficiently close socially and geographically, it can do so unilaterally.
    Date: 2010
  3. By: Harris, D.; Herrmann, B.; Kontoleon, A.
    Abstract: In-group favouritism behaviour is observed everywhere around the world and previous research has shown that this behaviour is also easily triggered in a laboratory in various contexts. However, little is known about why different magnitudes of in-group favouritism are observed across societies. In this paper, we use a new allocation experiment to examine the nature of social norms within the context of in-group favouritism behaviour. In this experiment, a decision-maker has to decide only once how to allocate a fixed amount of resource between each of the three members of her own group and each of the three members of the out-group, whilst the decision- maker's own payo is not aected by her decision. Three treatments are implemented: in the first treatment, only the members of the in-group can punish the decision-maker. In the second treatment, only the members of the out-group can punish the decision-maker. Finally, in the third treatment, only an independent third-party observer can punish the decision-maker. The aim of these treatments is to test whether there is a prevailing social norm which dominates the behavioural standard within the context of in-group favouritism and whether this mechanism varies across dierent subject pools, namely Thailand and the UK.<br><br> Compared to a baseline treatment with no punishment opportunity, we observed that among the Thai subjects in-group favouritism significantly increased once the in-group members were given the opportunity to punish the decision-maker. The threat of punishment from a third-party punisher also increased in-group favouritism in Thailand. However, when only the out-group members had the opportunity to punish, no change in in-group favouritism behaviour was observed. On the contrary, within the British subject pool, when the out-group members had the opportunity to punish the decision-maker, we observed a decline in in-group favouritism as well as a marked shift towards an equitable outcome. The threats of punishments from the in-group members and the third-party, on the other hand, did not have any impact on in-group favouritism behaviour in the UK. The results suggest that within the Thai subject pool, there appears to be a prevailing `in-group bias norm' which is strongly enforced within and outside the group. Within the UK subject pool, however, it is less clear what the prevailing norm is. Whilst the threat of punishment from the out-group members who directly lose out from favouritism behaviour appeared to significantly reduce this behaviour, an uninvolved third-party was not willing to incur a cost to punish this behaviour. This interesting result indicates two possible explanations: first, in-group favouritism, in contrast to selfish or opportunistic behaviour, may not considered as a strong enough violation of a social norm; and second, the norm of egalitarianism within the context of favouritism may still be `evolving'.
    Keywords: Social Norms, In-group Favouritism, Group Behaviour, In-group Punishment, Out-group Punishment, Third-party Punishment, Experimental Design
    JEL: D73 C92
    Date: 2010–12–13
  4. By: Nesadurai, Helen E.S. (Monash University)
    Abstract: here is a vibrant regional civil society in Asia with numerous civil society organizations (CSOs) advancing a range of economic, political and social causes using three key strategies, namely regional advocacy, civil society parallel summits, and civil society partnerships with states and regional institutions. Although regional institutions have become more willing to engage with non-elite or grassroots civil society and labor groups, business networks are still privileged in institutional processes. Consequently, regional institutions fail to tap the information and knowledge resources of CSOs to enhance the quality of regional institutional governance, defined as the effectiveness of governance institutions as well as their accountability to stakeholders. The paper outlines three interrelated strategies to correct this deficit. First, regional institutions should provide and safeguard a regional ―public sphere‖ in which officials and a variety of CSOs, not just those sharing official views, can engage each other in reasoned discussion. Second, regional institutions should develop more formalized or regularized mechanisms (as opposed to ad hoc or informal measures) through which CSOs can submit research reports, position papers, and comments on the various items on the regional institutional agenda, particularly on new agreements. The Asian Development Bank‘s NGO and Civil Society Center offers one institutional model. Third, regional institutions should establish formal accountability mechanisms such as a formal complaints procedure through which stakeholders and their CSO representatives can bring claims against regional institutions as well as internal and independent evaluation mechanisms.
    Keywords: civil society; non-governmental organizations (NGOs); regional institutions; governance; accountability
    JEL: F15 F23 F53
    Date: 2010–11–01
  5. By: Michel Grabisch (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); Agnieszka Rusinowska (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)
    Abstract: We generalize a yes-no model of influence in a social network with a single step of mutual influence to a framework with iterated influence. Each agent makes an acceptance- rejection decision and has an inclination to say either ‘yes' or ‘no'. Due to influence by others, an agent's decision may be different from his original inclination. Such a transformation from the inclinations to the decisions is represented by an influence function. We analyze the decision process in which the mutual influence does not stop after one step but iterates. Any classical influence function can be coded by a stochastic matrix, and a generalization leads to stochastic influence functions. We apply Markov chains theory to the analysis of stochastic binary influence functions. We deliver a general analysis of the convergence of an influence function and then study the convergence of particular influence functions. This model is compared with the Asavathiratham model of influence. We also investigate models based on aggregation functions. In this context, we give a complete description of terminal classes, and show that the only terminal states are the consensus states if all players are weakly essential.
    Keywords: Social network, influence, stochastic influence function, convergence, terminal class, Markov chains, aggregation functions.
    Date: 2010–11
  6. By: Michalis Drouvelis
    Abstract: Experimental evidence from public good games with punishment suggests that punishment works when subjects assign it fairly by sanctioning non-cooperators. This paper reports an experiment in which punishment is assigned unfairly in the sense that it is not linked to individual behaviour and is melted out to all group members (irrespective of their prior behaviour). We test whether unfair punishment generates different contribution and punishment behaviour relative to the standard punishment game. Our findings suggest different dynamics of average contributions in the presence of unfair punishment relative to the standard punishment game. Contribution levels are significantly different only when subjects have obtained experience from both games. We also find that, although the assignment of punishment is unaffected after the experience of an environment with unfair punishment, a history of unfair punishment makes a difference regarding reactions to alleviation, reward and punishment received.
    Keywords: Recriprocity, Unfair punishment, Public good experiments
    JEL: C92 H41
    Date: 2010–11
  7. By: Berg, Nathan; Gigerenzer, Gerd
    Abstract: For a research program that counts improved empirical realism among its primary goals, it is surprising that behavioral economics appears indistinguishable from neoclassical economics in its reliance on “as-if” arguments. “As-if” arguments are frequently put forward in behavioral economics to justify “psychological” models that add new parameters to fit decision outcome data rather than specifying more realistic or empirically supported psychological processes that genuinely explain these data. Another striking similarity is that both behavioral and neoclassical research programs refer to a common set of axiomatic norms without subjecting them to empirical investigation. Notably missing is investigation of whether people who deviate from axiomatic rationality face economically significant losses. Despite producing prolific documentation of deviations from neoclassical norms, behavioral economics has produced almost no evidence that deviations are correlated with lower earnings, lower happiness, impaired health, inaccurate beliefs, or shorter lives. We argue for an alternative non-axiomatic approach to normative analysis focused on veridical descriptions of decision process and a matching principle – between behavioral strategies and the environments in which they are used – referred to as ecological rationality. To make behavioral economics, or psychology and economics, a more rigorously empirical science will require less effort spent extending “as-if” utility theory to account for biases and deviations, and substantially more careful observation of successful decision makers in their respective domains.
    Keywords: bounded rationality; ecological rationality; as-if; fit; prediction; decision; process
    JEL: B1 B4
    Date: 2010
  8. By: Berg, Nathan
    Abstract: This article describes the emerging subfield known as behavioral economics, which borrows from psychology, empirically tests assumptions used elsewhere in economics, and provides theories that aim to be more realistic and closely tied to experimental and field data. Highlights from the experimental findings of behavioral economics are discussed. The article remarks critically on the role of empirical realism and continued use of as-if methodology in behavioral economics. Problems in normative behavioral economics are given special attention as debates arise concerning how to interpret empirical findings that contradict standard definitions of axiomatic rationality. Ecological rationality, methodological pluralism, and Simon's notion of bounded rationality are considered.
    Keywords: bounded rationality; ecological rationality; Herbert Simon; as-if; survey
    Date: 2010
  9. By: Angelo Mele
    Abstract: <p><p>In this paper, I develop and estimate a dynamic model of strategic network formation with heterogeneous agents. While existing models have multiple equilibria, I prove the existence of a unique stationary equilibrium, which characterizes the likelihood of observing a specific network in the data. As a consequence, the structural parameters can be estimated using only one observation of the network at a single point in time. The estimation is challenging because the exact evaluation of the likelihood is computationally infeasible. To circumvent this problem, I propose a Bayesian Markov Chain Monte Carlo algorithm that avoids direct evaluation of the likelihood. This method drastically reduces the computational burden of estimating the posterior distribution and allows inference in high dimensional models.</p> </p><p><p>I present an application to the study of segregation in school friendship networks, using data from Add Health containing the actual social networks of students in a representative sample of US schools. My results suggest that for white students, the value of a same-race friend decreases with the fraction of whites in the school. The opposite is true for African American students.</p> </p><p><p>The model is used to study how different desegregation policies may affect the structure of the network in equilibrium. I find an inverted u-shaped relationship between the fraction of students belonging to a racial group and the expected equilibrium segregation levels. These results suggest that desegregation programs may decrease the degree of interracial interaction within schools.</p></p>
    Date: 2010–11
  10. By: Cassi, Lorenzo; Plunket, Anne
    Abstract: This paper investigates the determinants of co-inventor tie formation using micro-data on genomic patents from 1990 to 2006 in France. We consider in a single analysis the relational and proximity perspectives that are usually treated separately. In order to do so, we analyse the determinants of network ties that occur within existing components and between two distinct components (i.e. bridging ties). We test the argument that formation of these two different types of ties results from distinct strategies in accessing resources. Doing so, we contrast network and proximity determinants of network formation and we investigate if social network allows economic actors to cross over geographical, technological and organizational boundaries.
    Keywords: Social networks; relational perspective; proximity; co-patenting; network formation
    JEL: R12 Z13 D85 O31
    Date: 2010–11
  11. By: Gürerk, Özgür
    Abstract: Endogenously chosen punishment institutions perform well in increasing contributions and long-term payoffs in social dilemma situations. However, they suffer from (a) initial reluctance of subjects to join the punishment institution and (b) initial efficiency losses due to frequent punishment. Here, we investigate the effects of social learning on the acceptence and the efficiency of a peer punishment institution in a community choice experiment. Subjects choose between communities with and without the possibility to punish peers before interacting in a repeated social dilemma situation. We find that providing participants with a social history - presenting the main results of an identical previous experiment conducted with dierent subjects - decreases the initial reluctance towards the punishment institution signicantly. Moreover, with social history, cooperative groups reach the social optimum more rapidly and there is lower efficiency loss due to reduced punishment. Our findings shed light on the importance of social learning for the acceptance of seemingly unpopular but socially desirable mechanisms.
    Keywords: Social dilemmas; Social history; Social learning; Community choice; Punishment; Institution choice
    JEL: C92 H41
    Date: 2010–11
  12. By: Michael Lovaglia; John Skvoretz; David Willer; Barry Markovsky
    Date: 2010–12–10
  13. By: Fedele , Alessandro (Associazione Italiana per la Cultura della Cooperazione e del Non Profit); Miniaci, Raffaaele (Associazione Italiana per la Cultura della Cooperazione e del Non Profit)
    Abstract: Using a longitudinal data set of balance sheets of 504 non profit and for-profit firms operating in the social residential sector in Italy, we investigate the relationship between capital structure and type of enterprise. The nondistribution constraint typical of nonprofit organizations increases the fraction of own capital on total investment: this is shown, by means of a theoretical moral hazard model, to reduce their leverage. By contrast, the intrinsecally high commitment of nonprofit entrepreneurs weakens the moral hazard problem: this augments leverage (ii). Our empirical analysis shows that once control for observable characteristics for-profitt companies have a leverage 6% higher than nonprofit enterprises, even if the latter faces lower credit costs. We explain this finding by arguing that effect prevails on effect.
    Keywords: for-profit and nonprofit enterprises; capital structure
    JEL: A13 D21 D82 G32
    Date: 2010–03–17
  14. By: Cuntz, A.N.; Blind, K.
    Abstract: We analyze the impact of (alliance) network exposure on the speed and extent of adoption of the business model as being one explanatory factor for diffusion controlling for actor specific characteristics and embeddedness in the network. In order to explain how existing national regulation moderated this relationship and whether it succeeded in its risk-limiting mission by moderating global adoption patterns and risk-bearing behavior among financial institutions we estimate various history event analysis model i.e. standard Cox and extended frailty models. We find strong support for the role of network exposure rather than social learning, the impact of regulatory effort on patterns of adoption and the role of country clusters for diffusion in the financial sector.
    Keywords: diffusion;networks;alliances;banking;regulation;social learning;exposure
    Date: 2010–12–01
  15. By: Becchetti, Leonardo (Associazione Italiana per la Cultura della Cooperazione e del Non Profit); Conzo, Pierluigi (Associazione Italiana per la Cultura della Cooperazione e del Non Profit)
    Abstract: Creditworthiness and trustworthiness are almost synonyms since the act of conferring a loan has the indirect effect of signaling the trustworthiness of the borrower. We test the creditworthiness-trustworthiness nexus in an investment game experiment on a sample of participants/non participants to a microfinance program in Argentina and find that trustors give significantly more to (and believe they will receive more from) microfinance borrowers. Trustees’ first and second order beliefs are also consistent with this picture. Our findings identify a “horizontal trustworthiness externality” which creates a direct (loan-performance) causality nexus since the mere loan provision increases the borrower’s attractiveness as a business partner.
    Keywords: field experiment; microfinance; investment game; trust; trustworthiness
    JEL: C93 O16
    Date: 2010–12–07
  16. By: Jurjen J.A. Kamphorst (Erasmus University Rotterdam); Otto H. Swank (Erasmus University Rotterdam)
    Abstract: We develop a theory of leadership that focuses on the role managers play in motivating employees through their attitude towards employees. We model a manager's attitude as her perception about employees' abilities of successfully completing challenging tasks. We show that a positive attitude motivates employees who are driven by monetary rewards. A negative attitude may motivate employees who are driven by concerns about their reputation for being able. When employees are driven by monetary rewards and care about their reputations, an increase in the reward for successfully completing challenging tasks may lead employees to shy away from these tasks.
    Keywords: reputation; worker motivation; task choice; principle-agent; Giffen goods
    JEL: D82 M59
    Date: 2010–12–07
  17. By: Christian Bjørnskov (Aarhus University); Axel Dreher (University of Goettingen); Justina A.V. Fischer (Faculty of Economics, University of Rome "Tor Vergata"); Jan Schnellenbach (Ruprecht-Karls-Universität Heidelberg,)
    Abstract: In this paper, we revisit the association between happiness and inequality. We argue that the interaction between the perceived and the actual fairness of the income generation process affects this association. Building on a simple model of individual labor-market participation under uncertainty, we predict that higher levels of perceived fairness cause higher levels of utility, and lower preferred levels of income redistribution. In societies with a low level of actual social mobility, income inequality is perceived more negatively with increased perceived fairness, due to the need for unexpected policy changes as a response to many unsuccessful investments of overly optimistic individuals. This effect becomes smaller as actual social mobility increases. Using data on happiness and a broad set of fairness measures from the World Values Survey, we find strong support for the negative (positive) association between fairness perceptions and the demand for more equal incomes (subjective wellbeing). We also find strong empirical support for the disappointment effect in countries with low social mobility. Consistent with our theoretical model, the results for high-mobility countries turn out to be ambiguous.
    Keywords: Happiness, life satisfaction, subjective well-being, inequality, income distribution, redistribution, political ideology, justice, fairness, World Values Survey
    JEL: I31 H40 D31 J62 Z13
    Date: 2010–11–08
  18. By: Batiz-Lazo, Bernardo; Krichel, Thomas
    Abstract: This paper adds to the growing literature on the formation of online communities from an historical perspective by telling of the emergence and development of a service for speedy, online distribution of recent additions to the broad literatures on economics and related areas called NEP: New Economics Papers as well as the online community that grew around it. We provide details of the social and technological challenges for its construction as well as the evolution of its governance. The development of NEP provides an illustrative example for the kind of new business models that have emerged as the Internet has been used by creative minds to provide existing services in a new way.
    Keywords: digital libraries; online communities; open source; New Economic Papers (NEP); RePEc
    JEL: N8 A31 L63
    Date: 2010–11

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