nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2015‒12‒20
eighteen papers chosen by
Fabio Sabatini
Università degli Studi di Roma “La Sapienza”

  1. Left Behind but Doing Good? Civic Engagement in Two Post-Socialist Countries By Nikolova, Milena; Roman, Monica; Zimmermann, Klaus F
  2. In Gov we trust: Voluntary compliance in networked investment games By Natalia Borzino; Enrique Fatas; Emmanuel Peterle
  3. Networks and the macroeconomy: an empirical exploration By Acemoglu, Daron; Akcigit , Ufuk; Kerr, William R
  4. Macroeconomic Dynamics of Assets, Leverage and Trust By Jeroen Rozendaal; Yannick Malevergne; Didier Sornette
  5. The Anticipatory Effect of Nonverbal Communication on Generosity By Brook, Rebecca; Servátka, Maroš
  6. Social norms and information diffusion in water-saving programs: Evidence from a randomisedfield experiment in Colombia By Marcela Jaime Torres
  7. Privacy, trust and social network formation By Gaudeul, Alexia; Giannetti, Caterina
  8. Bad Company: Reconciling Negative Peer Effects in College Achievement By Brady, Ryan; Insler, Michael; Rahman, Ahmed
  9. Why are heterogeneous communities inefficient? Theory, history and an experiment By David Hugh-Jones; Carlo Perroni
  10. Fractionalization and Entrepreneurial Activities By Awaworyi Churchill, Sefa
  11. Let's stay in touch - evidence on the role of social learning in local tax interactions By Blesse, Sebastian; Martin, Thorsten
  12. A Large Scale Test of the Effect of Social Class on Prosocial Behavior By Martin Korndörfer; Boris Egloff; Stefan C. Schmukle
  13. Ways to measure honesty: A new experiment and two questionnaires By David Hugh-Jones
  14. The Tragedy of Corruption Corruption as a social dilemma By Ye-Feng Chen; Shu-Guang Jiang; Marie Claire Villeval
  15. How worker participation affects reciprocity under minimum remuneration policies: Experimental evidence By Köhler, Katrin; Pagel, Beatrice; Rau, Holger A.
  16. Emergence of networks and market institutions in a large virtual economy By Kephart, Curtis; Friedman, Daniel; Baumer, Matt
  17. Economic backwardness and social tension By Christa Brunnschweiler; Paivi Lujala
  18. Honesty and beliefs about honesty in 15 countries By David Hugh-Jones

  1. By: Nikolova, Milena; Roman, Monica; Zimmermann, Klaus F
    Abstract: The fall of socialism in Central and Eastern Europe restored ordinary citizens’ rights and freedoms and ended their political and social isolation. While the freedom of movement was quickly embraced, civil society revival lagged due to the eroded civic norms, declining social capital, and worsening economic conditions. In this paper, we examine the link between the out-migration of relatives and friends and the pro-social behavior of the left behinds in two post-socialist countries—Bulgaria and Romania—the EU’s poorest, unhappiest, and among the most corrupt members. We show that having close contacts abroad is consistently positively associated with civic engagement and that the cultural transmission of norms from abroad could be driving the results. Specifically, the strength of the civic engagement culture of the family or friend’s destination matters for the pro-social behavior of respondents in the home countries. Our results imply that the emigration of family and friends may have positive but previously undocumented consequences for the individuals and communities left behind in Bulgaria and Romania. Given civil society’s role for development in post-socialist Europe and the socio-economic and institutional challenges that Bulgaria and Romania face compared with the rest of the EU, understanding the channels fostering civil society and well-being are important for national and EU policymakers.
    Keywords: civic engagement; international migration; left behind; post-socialism; social remittances
    JEL: I30 I31 P30 Z10
    Date: 2015–12
  2. By: Natalia Borzino (University of East Anglia); Enrique Fatas (University of East Anglia); Emmanuel Peterle (University of Gottingen)
    Abstract: We conduct a controlled laboratory experiment to investigate trust and trustworthiness in a networked investment game in which two senders interact with a receiver. We investigate to what extent senders and receivers comply with an exogenous and non-binding recommendation. We also manipulate the level of information available to senders regarding receiver’s behavior in the network. We compare a baseline treatment in which senders are only informed about the actions and outcomes of their own investment games to two information treatments. In the reputation treatment, senders receive ex ante information regarding the average amount returned by the receiver in the previous period. In the transparency treatment, each sender receives ex post additional information regarding the returning decision of the receiver to the other sender in the network. Across all treatments and for both senders and receivers, the non-binding rule has a significant and positive impact on individual decisions. Providing senders with additional information regarding receiver’s behavior affects trust at the individual level, but leads to mixed results at the aggregate level. Our findings suggest that reputation building, as well as allowing for social comparison could be efficient ways for receivers to improve trust within networks.
    Date: 2015–12
  3. By: Acemoglu, Daron (Massachusetts Institute of Technology); Akcigit , Ufuk (University of Chicago); Kerr, William R (Harvard University)
    Abstract: The propagation of macroeconomic shocks through input-output and geographic networks can be a powerful driver of macroeconomic fluctuations. We first exposit that in the presence of Cobb-Douglas production functions and consumer preferences, there is a specific pattern of economic transmission whereby demand-side shocks propagate upstream (to input-supplying industries) and supply-side shocks propagate downstream (to customer industries) and that there is a tight relationship between the direct impact of a shock and the magnitudes of the downstream and the upstream indirect effects. We then investigate the short-run propagation of four different types of industry-level shocks: two demand-side ones (the exogenous component of the variation in industry imports from China and changes in federal spending) and two supply-side ones (TFP shocks and variation in knowledge/ideas coming from foreign patenting). In each case, we find substantial propagation of these shocks through the input-output network, with a pattern broadly consistent with theory. Quantitatively, the network-based propagation is larger than the direct effects of the shocks. We also show quantitatively large effects from the geographic network, capturing the fact that the local propagation of a shock to an industry will fall more heavily on other industries that tend to collocate with it across local markets. Our results suggest that the transmission of various different types of shocks through economic networks and industry interlinkages could have first-order implications for the macroeconomy.
    Keywords: economic fluctuations; geographic collocation; input-output linkages; networks; propagation; shocks
    JEL: E32
    Date: 2015–12–09
  4. By: Jeroen Rozendaal; Yannick Malevergne; Didier Sornette
    Abstract: A macroeconomic model based on the economic variables (i) assets, (ii) leverage (defined as debt over asset) and (iii) trust (defined as the maximum sustainable leverage) is proposed to investigate the role of credit in the dynamics of economic growth, and how credit may be associated with both economic performance and confidence. Our first notable finding is the mechanism of reward/penalty associated with patience, as quantified by the return on assets. In regular economies where the EBITA/Assets ratio is larger than the cost of debt, starting with a trust higher than leverage results in the highest long-term return on assets (which can be seen as a proxy for economic growth). Our second main finding concerns a recommendation for the reaction of a central bank to an external shock that affects negatively the economic growth. We find that late policy intervention in the model economy results in the highest long-term return on assets and largest asset value. But this comes at the cost of suffering longer from the crisis until the intervention occurs. The phenomenon can be ascribed to the fact that postponing intervention allows trust to increase first, and it is most effective to intervene when trust is high. These results derive from two fundamental assumptions underlying our model: (a) trust tends to increase when it is above leverage; (b) economic agents learn optimally to adjust debt for a given level of trust and amount of assets. Using a Markov Switching Model for the EBITA/Assets ratio, we have successfully calibrated our model to the empirical data of the return on equity of the EURO STOXX 50 for the time period 2000-2013. We find that dynamics of leverage and trust can be highly non-monotonous with curved trajectories, as a result of the nonlinear coupling between the variables.
    Date: 2015–12
  5. By: Brook, Rebecca; Servátka, Maroš
    Abstract: Is nonverbal communication capable of affecting economic outcomes? We study the effect of anticipated approval and disapproval, expressed through emoticons, on generosity and show that it discourages selfish behavior. In our experiment subjects play a one-shot dictator game at the end of which the recipient can respond to the allocation by drawing an emoticon and sending it back to the dictator. While the observed effect of nonverbal communication is somewhat weaker than the anticipation of a verbal response, our results provide evidence that people are willing to trade-off pecuniary gains to avoid disapproval or seek approval of their peers and that the sheer anticipation of receiving a response, even nonverbal, is sufficient to change their behavior.
    Keywords: approval, disapproval, nonverbal communication, emotion, experiment, fairness, generosity, dictator game
    JEL: C91 D03 D04 D63
    Date: 2015–12–08
  6. By: Marcela Jaime Torres (University of Gothenburg – University of Concepcion)
    Abstract: This paper investigates the effects of an information campaign aimed at encouraging residential water-savings in Colombia. The experiment was organized as a randomised control trial, consisting of monthly delivery of consumption reports including normative messages during one year. We first evaluate the direct and indirect effects of the campaign, and then we investigate whether indirect effects are due to social networks. Results indicate that social information and appeal to norm-based behaviour has decreased water use by 5.4% during the first year following the intervention. We also find significant but short-term evidence of spillover effects. Nevertheless, these effects cannot be explained by social networks alone when social connectedness is proxied by both social and geographic proximity.
    Date: 2014
  7. By: Gaudeul, Alexia; Giannetti, Caterina
    Abstract: We study in the laboratory the impact of private information revelation on the selection of partners when forming individual networks. Our experiment combines a "network game" and a "public-good game". In the network game, individuals decide with whom to form a link with, while in the public-good game they decide whether or not to contribute. The variations in our treatments allow us to identify the effect of revealing one´s name on the probability of link formation. Our main result suggests that privacy mechanisms affect partner selection and the consequent structure of the network: when individuals reveal their real name, their individual networks are smaller but their profits are higher. This indicates that the privacy costs of revealing personal information are compensated by more productive links.
    Keywords: privacy,social networks,public goods,trust
    JEL: D12 D85
    Date: 2015
  8. By: Brady, Ryan; Insler, Michael; Rahman, Ahmed
    Abstract: Existing peer effects studies produce contradictory findings, including positive, negative, large, and small effects, despite similar contexts. We reconcile these results using U.S. Naval Academy data covering a 22-year history of the random assignment of students to peer groups. Coupled with students' limited discretion over freshman-year courses, our setting affords an opportunity to better understand peer effects in different social networks. We find negative effects at the broader "company" level (students' social and residential group) and positive effects at the narrower course-company level. We suggest that peer spillovers change direction because of differences in the underlying mechanism of peer influence.
    Keywords: Peer effects, social network formation, academic achievement, homophily
    JEL: D85 I21 I23 J24
    Date: 2015–11
  9. By: David Hugh-Jones (University of East Anglia); Carlo Perroni (University of Warwick)
    Abstract: We examine why heterogeneous communities may fail to provide public goods. Current work characterizes sanctioning free-riders as an undersupplied public good. We argue that often free-riders can be punished by the coordinated action of a group. This punishment can be profitable, and need not be undersupplied. But the power to expropriate defectors can also be used to expropriate outgroups. Heterogeneous societies may be inefficient because minorities, rather than free-riders, are expropriated. Even if this is not so, groups' different beliefs about the reasons for expropriation may make the threat of punishment less effective at preventing free-riding. We illustrate our theory with evidence from California mining camps, contemporary India, and US schools. In a public goods experiment using minimal groups and a profitable punishment institution, outgroups were more likely to be punished, and reacted differently to punishment than ingroup members.
    Keywords: group coercion, social heterogeneity
    JEL: H1 H4 N4 D02
    Date: 2015–04–02
  10. By: Awaworyi Churchill, Sefa
    Abstract: The vast majority of the literature on ethnicity and entrepreneurship focuses on the construct of ethnic entrepreneurship. However, very little is known about how ethnic heterogeneity affects entrepreneurship. This study attempts to fill the gap, and thus examines the effect of ethnic heterogeneity on entrepreneurial activities in a cross-section of 90 countries. Using indices of ethnic and linguistic fractionalization, we show that ethnic heterogeneity negatively influences entrepreneurship. We argue that potential channels that can explain the negative effect of fractionalization on entrepreneurship include trust, social network, social capital, innovation, and discrimination among others. Results are robust to several checks.
    Keywords: entrepreneurship,ethnic diversity,fractionalization
    Date: 2015–12–07
  11. By: Blesse, Sebastian; Martin, Thorsten
    Abstract: This paper exploits detailed information on local political and socioeconomic networks and a reform of local fiscal equalization in North Rhine-Westphalia (NRW) to identify the role of learning in local tax rate interactions. Using this policy change in spatial lag IV regressions, we find that institutions like counties and jointly used administrations yield significant positive tax interactions whereas geographical neighbors do not react to each other. Common local media trigger tax policy interactions as well. Short-lived reform effects support our findings that social learning within certain networks intensifies tax rate interactions via coordination of local decision makers.
    Keywords: Tax mimicking,Local business tax,Social learning,Institutions,Tax competition,Fiscal equalization schemes
    JEL: H20 H71 H77
    Date: 2015
  12. By: Martin Korndörfer; Boris Egloff; Stefan C. Schmukle
    Abstract: Does being from a higher social class lead a person to engage in more or less prosocial behavior? Psychological research has recently provided support for a negative effect of social class on prosocial behavior. However, research outside the field of psychology has mainly found evidence for positive or u-shaped relations. In the present research, we therefore thoroughly examined the effect of social class on prosocial behavior. Moreover, we analyzed whether this effect was moderated by the kind of observed prosocial behavior, the observed country, and the measure of social class. Across eight studies with large and representative international samples, we predominantly found positive effects of social class on prosociality: Higher class individuals were more likely to make a charitable donation and contribute a higher percentage of their family income to charity (32,090 ≥ N ≥ 3,957; Studies 1–3), were more likely to volunteer (37,136 ≥ N ≥ 3,964; Studies 4–6), were more helpful (N = 3,902; Study 7), and were more trusting and trustworthy in an economic game when interacting with a stranger (N = 1,421; Study 8) than lower social class individuals. Although the effects of social class varied somewhat across the kinds of prosocial behavior, countries, and measures of social class, under no condition did we find the negative effect that would have been expected on the basis of previous results reported in the psychological literature. Possible explanations for this divergence and implications are discussed.
    Date: 2015
  13. By: David Hugh-Jones (University of East Anglia)
    Abstract: I report on the validity of different measures of honest behaviour. Subjects from 15 countries took part in two web-based experiments: a coin flip with a reward for reporting "heads", and a quiz with the possibility of cheating. Participants also answered questions on moral attitudes, and on unethical real world behaviour. Honesty in the two experiments was correlated, and correlated with self-reports of behaviour. Answers to the attitudes questions did not correlate with the experimental measures or self-reported behaviour. The quiz experiment provides a useful way to measure individual honesty in an online setting.
    Keywords: honesty, lying, experiment, questionnaire
    JEL: D82 C93 C42 Z13
    Date: 2015–08–15
  14. By: Ye-Feng Chen (Zhejiang University - Zhejiang University - ZJU (CHINA)); Shu-Guang Jiang (Shandong University - Shandong University); Marie Claire Villeval (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We investigate corruption as a social dilemma by means of a bribery game in which a risk of collective failure is introduced when the number of public officials accepting a bribe from firms reaches a certain threshold. We show that, despite the social risk, the pursuit of individual interest prevails and leads to the elimination of honest officials over time. Reducing the size of the groups while increasing the probability of collective failure diminishes the public officials' corruptibility but is not sufficient to eliminate the tragedy of corruption altogether.
    Keywords: experiment,coordination,collective failure,social dilemma,bribing,Corruption
    Date: 2015
  15. By: Köhler, Katrin; Pagel, Beatrice; Rau, Holger A.
    Abstract: We analyze the role of worker participation for the success of minimum remuneration policies. In our experiments employers remunerate workers doing a real-effort task. We vary the way how a minimum remuneration policy is introduced. In the worker-participation treatment, workers bargain with the employer on the enforcement of the policy. In the control treatment the policy is exogenously introduced. We find a pronounced effort increase after the policy was enforced. An exogenous introduction has detrimental effects, i.e., employers frequently pay a premium to maintain performance. Thus, worker participation may be an effective means for maintaining reciprocity under minimum remuneration policies.
    Keywords: bargaining,experiment,real effort,worker participation
    JEL: C91 J31 J33 M52
    Date: 2015
  16. By: Kephart, Curtis; Friedman, Daniel; Baumer, Matt
    Abstract: A complete set of transactions, more than 40 million within a 1.8 year span, allows us to track the evolution of the trader network and the goods network in an on-line trading community. The computer platform was designed to make barter exchange as attractive as possible; money was not part of the design and all players were created equal. Yet, within weeks, several specific goods began to emerge as media of exchange, and not long after that various sorts of specialized traders began to appear. We track their progress using network-theoretic metrics such as node strength, assortativity, betweenness and closeness. By the end of our sample, virtually all trade was money-mediated and market makers played a major role.
    Keywords: Multiple Money as Medium of Exchange,Market Makers,Virtual Economy,Market Efficiency,Network Analysis
    JEL: B41 C45 D49 E42
    Date: 2015
  17. By: Christa Brunnschweiler (University of East Anglia); Paivi Lujala (Norwegian University of Science and Technology)
    Abstract: We propose that relative economic backwardness contributes to the build-up of social tension and the incidence of both nonviolent and violent forms of opposition to the current political regime. We take inspiration from Gerschenkron's (1962) essay on economic backwardness and more recent findings on international comparisons and status-seeking to develop a testable hypothesis. We use information on a large number of countries and years from a new dataset on episodes of organized mass movements and find that greater economic backwardness is indeed consistently linked to a higher probability of seeing both violent and nonviolent forms of civil unrest. IV estimations using three different instruments, including distance to either London or Washington, D.C., and mailing speeds and telegram charges around 1900, suggest that this relationship is causal.
    Date: 2015–08
  18. By: David Hugh-Jones (University of East Anglia)
    Abstract: The honesty of resident nationals of 15 countries was measured in two experiments: reporting a coin flip with a reward for "heads", and an online quiz with the possibility of cheating. There are large differences in honesty across countries. Average honesty correlates with per capita GDP: this relationship is driven mostly by GDP differences arising before 1950, rather than by GDP growth since 1950, suggesting that the growth-honesty relationship was more important in earlier periods than today. The experiment also elicited participants' beliefs about honesty in different countries. Beliefs were not correlated with reality. Instead they appear to be driven by cognitive biases, including self-projection.
    Date: 2015–09–25

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