nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2018‒05‒07
ten papers chosen by
Fabio Sabatini
Università degli Studi di Roma “La Sapienza”

  1. The Logic of Collective Action Revisited By Joachim Weimann; Jeannette Brosig-Koch; Timo Heinrich; Heike Hennig-Schmidt; Claudia Keser
  2. Social Media Networks, Fake News, and Polarization By Marina Azzimonti; Marcos Fernandes
  3. Individual Payoffs and the Effect of Homeownership on Social Capital Investment By Eric Fesselmeyer; Kiat Ying Seah
  4. How to make a deal: The role of rankings and personal ties in creating trust in the mergers and acquisitions market By Valérie Boussard; Olivier Godechot; Nicolas Woloszko
  5. Trust and the Effectiveness of Land Use Policies: Perception, Attitude and Behaviour of Rural Residents in China By Helen Bao; Lei Feng; Ye Jin; Scott Ziyou Wang
  6. Social Clubs and Social Networks By Fershtman, Chaim; Persitz, Dotan
  7. Parental Involvement and the Intergenerational Transmission of Economic Preferences and Attitudes By Maria Zumbuehl; Thomas Dohmen; Gerard Pfann
  8. The effects of official and unofficial information on tax compliance By Filomena Garcia; Luca David Opromolla; Andrea Vezzulli; Rafael Marques
  9. Group Influence in Sharing Experiments By Valeria Faralla; Guido Borà; Alessandro Innocenti; Marco Novarese
  10. Social norms and tax compliance: Experiments and theory By López Pérez, Raúl; Ramírez Zamudio, Aldo.

  1. By: Joachim Weimann; Jeannette Brosig-Koch; Timo Heinrich; Heike Hennig-Schmidt; Claudia Keser
    Abstract: Since Mancur Olson’s “Logic of collective action” it is common conviction in social sciences that in large groups the prospects of a successful organization of collective actions are rather bad. Following Olson’s logic, the impact of an individual’s costly contribution becomes smaller if the group gets larger and, consequently, the incentive to cooperate decreases with group size. Conducting a series of laboratory experiments with large groups of up to 100 subjects, we demonstrate that Olson’s logic does not generally account for observed behavior. Large groups in which the impact of an individual contribution is almost negligible are still able to provide a public good in the same way as small groups in which the impact of an individual contribution is much higher. Nevertheless, we find that small variations of the MPCR in large groups have a strong effect on contributions. We develop a hypothesis concerning the interplay of MPCR and group size, which is based on the assumption that the salience of the advantages of mutual cooperation plays a decisive role. This hypothesis is successfully tested in a second series of experiments. Our result raises hopes that the chance to organize collective action of large groups is much higher than expected so far.
    Keywords: public goods, large groups
    JEL: C90
    Date: 2018
  2. By: Marina Azzimonti; Marcos Fernandes
    Abstract: We study how the structure of social media networks and the presence of fake news might affect the degree of misinformation and polarization in a society. For that, we analyze a dynamic model of opinion exchange in which individuals have imperfect information about the true state of the world and are partially bounded rational. Key to the analysis is the presence of internet bots: agents in the network that do not follow other agents and are seeded with a constant flow of biased information. We characterize how the flow of opinions evolves over time and evaluate the determinants of long-run disagreement among individuals in the network. To that end, we create a large set of heterogeneous random graphs and simulate a long information exchange process to quantify how the bots’ ability to spread fake news and the number and degree of centrality of agents susceptible to them affect misinformation and polarization in the long-run.
    JEL: C45 C63 D72 D8 D83 D85 D91
    Date: 2018–03
  3. By: Eric Fesselmeyer; Kiat Ying Seah
    Abstract: Are all social capital investments equal in the eyes of homeowners and renters? Presumably, social capital investments that lead to increases in home values provide stronger incentives for homeowners than renters. In contrast, for social capital investments that do not directly impact home values, one would not expect homeowners and renters to differ in their investment rates. In this paper, we test this hypothesis using confidential and detailed individual-level panel data from Los Angeles county. We estimate the effect of homeownership on social capital investment, i.e., participation in social-capital creating activities, using a bivariate probit model and fixed effects models that control for individual-specific, time-constant heterogeneity that would otherwise cause omitted variable bias. Each model addresses the endogeneity of homeownership differently with identification arising from different sources. We find strong evidence that homeownership increases the rate of participation in block meetings, a social capital investment that should affect property values, and find no homeownership effect on three other social capital creating activities that likely do not: volunteerism, participation in a local political organization, and participation in a civic group. The results suggest that the effect of homeownership on social capital investment depends on whether the returns to such investments accrue solely to homeowners.
    Keywords: Homeownership; Housing externalities; Social Capital
    JEL: R3
    Date: 2017–07–01
  4. By: Valérie Boussard (Professions, institutions, temporalités); Olivier Godechot (Observatoire sociologique du changement); Nicolas Woloszko (École normale supérieure - Cachan (ENS Cachan))
    Abstract: On the mergers and acquisitions (M&A) market, buyers and sellers resort to experts in order to secure deals. But as these experts might be prone to opportunism, firms need to find a way to build trust. We identify two trust devices: social ties and public rankings. We explore whether these personal and impersonal devices are substitutes, independent or complementary. We study the French M&A market through a mixed-method approach. We show that both previous contacts and league table rankings of firms contribute to trust and to making deals. These trust devices are all the more likely to be used if the deal is risky, especially within the sell side (more at risk). We also find that firms tend to make deals only with other firms at the same level in the rankings. Finally, we find some evidence of substitution between rankings and personal ties, especially for low-value deals.
    Keywords: Finance; Rankings; Networks; Trust
    JEL: G24 L14 L15
    Date: 2017–12
  5. By: Helen Bao; Lei Feng; Ye Jin; Scott Ziyou Wang
    Abstract: It has been found that political trust has a significant impact on rural residents’ participation in local governance, support to government policies, and contributions to public goods. The general consensus is that high political trust can improve the effectiveness of local governance by engaging individuals in the design and implementation of public policies. However, existing studies on the effectiveness of land use policies in China mainly focus on the dynamics between local and central governments. This approach inevitably overlooks the attitude and behaviour of rural residents. To bridge this gap in the literature, this project is set up to verify whether villagers’ trust in local governments influence the effectiveness of land use policies. I focus on the following four specific aspects of effectiveness of land use policy in China: 1) land tenure security, 2) land-related investment, 3) willingness to participate and corporate in land market reforms, and 4) land-related disputes and petitions. A large scale questionnaire survey will be conducted to interview rural residents about their perception, attitude and behaviour. Behavioral insights will be applied to analyze and interpret the findings. Results of this project will potentially improve our understanding of the role of social norms (such as political trust) in public policy domain. The ultimate goal of this project is to provide policy recommendations to promote sustainable urbanization and rural development in China through improving the effectiveness of land use policies.
    Keywords: Behavioural Economics; Corruption; Fairness; Quality of Governance; Social Preference
    JEL: R3
    Date: 2017–07–01
  6. By: Fershtman, Chaim; Persitz, Dotan
    Abstract: We present a strategic network formation model which is based on membership in clubs. Agents choose a set of clubs with which they wish to be affiliated. The set of all club memberships (an environment) induces a weighted network in which two agents are directly connected if they are members of the same club. Two agents may also be indirectly connected using the multiple memberships of third parties. Agents gain from their position in the induced network and pay membership fees. Thus, both clubs and the network are formed simultaneously. Using two specifications of the weighting function we introduce two models based upon congestion - one, the club congestion model wherein the weight of each link depends upon the size of the smallest shared club and the other, the individual congestion model wherein each link's weight depends on the number of affiliations maintained by the two agents. In the club congestion model we focus on the trade-off between the size of the club, depreciation due to indirect connections and membership fees. In the individual congestion model the Grand Club environment is the unique efficient environment. However, a coordination failure arises due to the wide externalities incurred by the formation of new affiliations. We believe that this framework may serve as a basis for an empirical examination of the role of linking platforms in shaping real-life social networks.
    Date: 2018–04
  7. By: Maria Zumbuehl (University of Bern); Thomas Dohmen (University of Bonn, Maastricht University, IZA, DIW, CESifo); Gerard Pfann (Maastricht University, CEPR, CESifo, IZA, DIA, SOFI)
    Abstract: We empirically investigate the link between parental involvement and shaping of the economic preferences and attitudes of their children. We exploit information on the risk and trust attitudes of parents and their children, as well as rich information about parental efforts in the upbringing of their children from the German Socio-Economic Panel Study. Our results show that parents who are more involved in the upbringing of their children are more similar to them with respect to risk and trust attitudes and thus transmit their own attitudes more strongly.
    Date: 2018–04
  8. By: Filomena Garcia; Luca David Opromolla; Andrea Vezzulli; Rafael Marques
    Abstract: The administration of tax policy has shifted its focus from enforcement to complementary instru- ments aimed at creating a social norm of tax compliance. In this paper we provide an analysis of the effects of the dissemination of information regarding the past degree of tax evasion at the social level on the current individual tax compliance behavior. We build an experiment where, for given levels of audit probabilities, fines and tax rates, subjects have to declare their income after receiving either a communication of the official average tax evasion rate or a private message from a group of ran- domly matched peers about their tax behavior. We use the experimental data to estimate a dynamic econometric model of tax evasion. The econometric model extends the Allingham–Sandmo–Yitzhaki tax evasion model to include self-consistency and endogenous social interactions among taxpayers. We find four main results. First, tax compliance is very persistent. Second, the higher the official past tax evasion rate the higher the degree of persistence: evaders are more likely to evade again, and compli- ant individuals are more likely to comply again. Third, when all peers communicate to have evaded (complied) in the past, both evaders and compliant individuals are more likely to evade (comply). Fourth, while both treatments, and especially the unofficial information treatment, are associated, in the context of our experiment, with a significantly larger growth in evasion intensity, the aggregate effect depends on the characteristics of the population. In countries with inherently low levels of tax evasion, official information can have beneficial effects by consolidating the behavior of compliant in- dividuals. However, in countries with inherently high levels of tax evasion, official information can have detrimental effects by intensifying the behavior of evaders. In both cases, the impact of official information is magnified in the presence of strong peer effects.
    Keywords: Tax morale, Information, Tax evasion, Experiment, Peer Effects
    JEL: H26 D63 C24 C92 Z13
    Date: 2018–04
  9. By: Valeria Faralla; Guido Borà; Alessandro Innocenti; Marco Novarese
    Abstract: We assess in the laboratory the impact of promises on group decision-making. The gift-exchange game provides the testing ground for our experiment. When played between groups, inter-group cooperation and reciprocity represent a condition for efficiency in overall decision making. We find that promises have a significant positive effect on aggregate profits. We interpret these findings as if promises act as a trigger of social conformity, according to which groups adopt socially more desirable behavior even without face-to-face communication or discussion.
    Keywords: group decision, promise, gift-exchange game, efficiency, social conformity.
    JEL: D81 D83
    Date: 2018–05
  10. By: López Pérez, Raúl (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.); Ramírez Zamudio, Aldo. (Center for Economics, Banking and Finance Studies, Department of Economics, Universidad de Lima.)
    Abstract: We report data from an experiment in Peru where subjects anonymously decide how much of their endowment they donate to the Peruvian Government. The standard rational choice model and several well-known models of non-selfish preferences predict zero giving. Yet we observe that around 75% of the subjects give something (N = 164), with substantial heterogeneity. Our data is consistent with an account based on social norms: If compliance is not too costly, people comply with norms if (i) they perceive that such behavior sufficiently promotes social welfare and (ii) others are expected to respect norms as well (peer effects). Our paper contributes to a recent literature on tax morale emphasizing the importance of non-standard motivations on tax compliance and suggests that taxpayers are willing to give money to the government (e.g., paying taxes) if they believe that enough others give as well and that taxes are not wasted or ‘stolen’ by the government, but used to promote social welfare.
    Keywords: corruption, evasion, peer effects, social norms, tax compliance, tax morale
    JEL: C92 D91 H21 H26 H3
    Date: 2018–04

This nep-soc issue is ©2018 by Fabio Sabatini. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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