Wednesday, May 30, 2007

NEP: New Economics Papers Social Norms and Social Capital

Edited by: Fabio Sabatini
University of Rome, La Sapienza
Issue date: 2007-05-19
Papers: 14
This document is in the public domain, feel free to circulate it.
Note: Access to full contents may be restricted.
NEP is sponsored by SUNY Oswego

In this issue we have:


  1. COOPERATION IN LARGE NETWORKS: AN EXPERIMENTAL Date: 2007-04-05 By: Juan Camilo Cárdenas P. Christian R. Jaramillo H. URL:

    We present a new design of a simple public goods experiment with a large number of players, where up to 80 people in a computer lab have the possibility to connect with others in the room to induce more cooperators to contribute to the public good and overcome the social dilemma. This experimental design explores the possibility of social networks to be used and institutional devices to create the same behavioral responses we observe with small groups (e.g. commitments, social norms, reciprocity, trust, shame, guilt) that seem to induce cooperative behavior in the private provision of public goods. The results of our experiment suggest that the structure of the network affects not only the players’ ability to communicate, but their willingness to do so as well. We also find that the local connectivity structure of the network has an important role as determinant of the willingness of the players to cooperate.

  2. Intentions, Insincerity, and Prosocial Behavior Date: 2007-05-13 By: Amegashie, J. Atsu URL:

    Consider a world with two people, 1 and 2, where person 1 (the proposer) may offer to help person 2 (the responder). The proposer may be altruistic towards the responder either out of a genuine desire to make her happy or out of guilt. The responder derives disutility from apparent acts of altruism motivated by guilt because she considers them to be insincere. She rejects some offers, depending on her beliefs about the proposer’s type. I model this social interaction as a game with interdependent preference types under incomplete information where the responder cares about the intentions behind the proposer’s prosocial behavior. I consider two recent formulations of endogenous guilt: simple guilt and guilt from blame. These formulations make the social interaction a psychological game. I find that the beliefs held by the players can lead to an equilibrium in which all offers are sincere and so no mutually beneficial trades are rejected, althoh the responder has incomplete information about the proposer’s type. Equilibria with insincere offers are possible under simple guilt but are impossible under guilt from blame. I discuss intrinsic and instrumental motivations for sincerity. I also discuss the implications of insincerity aversion for co-operation, altruism, political correctness, choice of identity, and trust. Keywords: guilt; intentions; insincerity; interdependent preference types; psychological game; social interaction. JEL: Z1 Z13

  3. Another experimental look at reciprocal behavior: indirect reciprocity Date: 2007-03 By: Bonein, Aurélie Serra, Daniel URL:

    This paper highlights a new social motivation, the indirect reciprocity, through a three-player dictator-ultimatum game. Player 2 has the opportunity to reward or punish indirectly the player 1 by inciting – with her offer - player 3 to accept or to reject the division. We implement three treatments: in the first two we vary player 2’s available information whereas in treatment 3, players take part in a dictator game - as proposers - before being player 2s in the dictator-ultimatum game. Results show that 55% of subjects in treatment 2 and 28% in treatment 3 behave as indirect reciprocity predicts. Another reciprocal behavior - the generalized reciprocity - is investigated through a three-player dictator game. Our data show that 80% of players 2 act according to this reciprocal behavior. Finally, our findings confirm that the more complex the strategic interaction becomes the more self-regarding behavior is likely and the less other-regardingehaviors, such as reciprocity, dominate. Keywords: indirect reciprocity; generalized reciprocity; dictator game; ultimatum game; individual behavior JEL: D63 C72 C91

  4. Does Social and Environmental Reporting Nurture Trust and Stakeholder Engagement and Reduce Risk? Date: 2006-01 By: Solomon, Jill (Cardiff Business School) URL:

    A number of theoretical lenses have been used to explain voluntary social and environmental reporting (SER) including legitimacy theory, stakeholder theory and political economy theory. Recent theoretical work in the SER area suggests that the risk society theory presents an appropriate alternative theoretical framework. According to the risk society theoretical framework, risks have evolved from manageable, identifiable, insurable risks into imperceivable, uninsurable, high consequence risks. Many high consequence risks relate directly to corporate behaviour in the social, ethical and environmental domain, such as global warming. The risk society framework is also characterised by a general decline in trust in institutions and organisations. This paper contributes to the SER literature by providing empirical evidence to support a risk society theory of voluntary SER. By engaging directly with 24 corporate social responsibility managers within UKisted companies, we show that risk is driving them to produce voluntary SER. The paper provides empirical evidence that SER is emerging as a mechanism for reducing risk and anxiety, through the nurturing of trust relationships between companies and their stakeholders. The interviews reveal that building and maintaining trust in shareholder and stakeholder relationships is a primary motivation for SER and that SER is a means of engaging in dialogue with the company's stakeholders. Companies are, from a risk society perspective, implementing SER as a risk management mechanism. We also find from the interviews that voluntary SER is motivated far more by its link with financial performance, through reputation enhancement, than by a genuine desire to enhance social justice. Keywords: Social and environmental reporting (SER); Risk society; Trust

  5. Social consistency and individual rationality Date: 2007 By: Antoine Billot URL:

    This paper aims at proving that social interactions can easily be rationalized by individual preferences as defined in standard microeconomic theory. For that purpose, we show individual choice rationality to be logically equivalent to social consistency, when individual rationality means that individual preferences are completely ordered and social consistency that there is a one-to-one mapping between a given family of social communities and the existence of a particular (unique, reflexive and symmetric) interaction relation between individuals. Moreover, continuity and monotonicity of individual preferences are shown to fit the modeling of group loyalty when group loyalty is defined as the ability to freely accept a personal loss for the global gain of a particular population.

  6. How to shake the Invisible Hand (when Robinson meets Friday) Date: 2007 By: Antoine Billot URL:

    We propose to define the invisible hand by (i) modelling the mechanism itself (not to just assume its existence) and (ii) making explicit the limit conditions for its working. For that purpose, we simply assimilate the working of the invisible hand mechanism to the existence of a social preference such that individual and social optimalities are consistent. In introducing the possibility of interaction among individuals, we then suggest that the standard "Robinson case" or social atomicity is just a degenerate feature of a more general requirement that we call the Global Network Agreement. Our main result is that the invisible hand mechanism does keep on working when there is an interaction between Robinson and Friday if the former (resp. the latter) is sensitive to the latter (resp. the former) in such a way that they exhibit some agreement in preferences. Hence, the "Robinson case" naturally satisfies this property since nor Robinson neither Fray can disagree with himself. But more cooperative situations are also allowed in order to extent the invisible hand mechanism to cases with interactions.

  7. Values, norms, transactions and organizations Date: 2007-05 By: Américo M. S. Carvalho Mendes (Faculdade de Economia e Gestão, Universidade Católica Portuguesa (Porto)) URL:

    This paper may be considered an essay on metaeconomics, since it deals with the meaning of several concepts often left undefined, or very briefly defined in economic theories. These concepts are the following: value including the values of things and moral values, social norms or institutions, social power, goods and services, transactions and organizations (firms, and others). The paper starts by proposing a general concept of value, encompassing both the value of things and moral values. From this concept it proceeds to the definition of six different types of values of things and moral values and to the concept of value transformation process of things which includes all the operations dealt with in economic theory as well as many other human actions. The last part of the paper starts with the distinction between moral values and social norms (or institutions) and the roles of social power and human organization in connecting the domains of molity and social normativity. The paper proceeds by distinguishing different types of norms, including possession norms which are important for defining the concepts of goods and services and transaction processes. JEL: A13 Z13

  8. Communication Networks in the N-Player Electronic Mail Game Date: 2007-03 By: Kris de Jaegher URL:

    This paper shows that Rubinstein’s results on the two-player electronic mail game do not extend to the N-player electronic mail game. Keywords: Communication Networks, N-Player Electronic Mail Game JEL: D85 C72

  9. The Impact of Social Conditioning (Internal Motivation) on the Probability of Voting Date: 2007 By: Garey C. Durden Richard J. Cebula Patricia Gaynor URL:

    This paper extends the well known rational interest voting (rational voter) model to include a composite measure to capture the residual effects of internal, sociological motives not previously accounted for in empirical studies of general election voting. These motives are referred to here as “social conditioning” or “internal motivation” and may to at least some extent reflect a sense of duty or sense of civic duty to vote, as well as a simple “habit” of voting. Estimations using CPS data from the 1984 Presidential elections suggest that previously unmeasured internal motives, which we capture in a variable called “Social Conditioning,” may exert a powerful influence on individual voting behavior.

  10. Innovation studies-an emerging discipline (or what)? A study of the global network of innovation scholars Date: 2006-09 By: Jan Fagerberg (Centre for Technology, Innovation and Culture, University of Oslo) Bart Verspagen (Centre for Technology, Innovation and Culture, University of Oslo) URL:

    Although innovation is not a new topic for scholarly research, the academic literature on innovation was, for a long time, not very voluminous. However, more recently innovation has become a major focus among scholars of different backgrounds, and this change is also reflected in an increasing number of academic publications in this area. In parallel with this we have seen the emergence of a number of new journals and professional associations devoted to the subject. The research reported in this paper is motivated by these trends. We wish to find an answer to the question to what extent it now exists a unified community of innovation scholars that identify themselves with innovation studies as a field rather than particular sub-fields within other, more traditional disciplines. Moreover, we want to explore the factors (sources of inspiration, academic leadership, professional societies, publishing outlets etc.) that bind scholars together or - aernatively - continue to keep them divided. The research reported in this paper is based on a web-survey carried out in during 2004 and 2005. The results suggest that a global innovation studies community exists as a collection of a large number of relatively small groups (characterized dense internal relationships) defined along geographical and disciplinary lines. Although the field has spread over many countries and disciplines, it is particularly developed in Europe and among scholars with a background in economics. These smaller groups, however, are embedded in larger transnational groups or clusters that are kept together by what is commonly referred to as "weak ties". Leading scholars, professional associations and journals all play an important role in keeping these larger groups together (as well as distinguishing them from each other). Keywords: Innovation, Networks JEL: O10

  11. Crowding out in an indefinitely repeated Asymmetric Trust Game Date: 2006-12 By: Thomas Dirkmaat Stephanie Rosenkranz Vincent Buskens URL:

    In this paper we introduce an alternative version of the trust game by Dasgupta (1988) and Kreps (1990) that allows for asymmetric information. We use this version to study the effect of checking on the trustee’s behaviour, checking is a control option the trustor can decide to use and that takes place after both trustor and trustee made their initial decisions. ‘Checking’ differs in this respect from the often in the literature found ‘monitoring’ that allows the trustor to control the trustee’s behaviour before the trustee makes his decision. The game theoretical analysis suggests that checking increases cooperation. The experimental results show that this is only true for the selfish part of the trustee population. Honest trustee react negatively to checking, which is more in line with crowding out theory. Keywords: Trust, Asymmetric Information, Experiment, Checking, Crowding Out JEL: C71 C91 D82

  12. Altruistic Versus Spiteful Behavior in a Public Good Game Date: 2007-05 By: Alexander Matros URL:

    This paper analyses an evolutionary version of the Public Good game of Eshel, Samuelson, and Shaked (1998) in which agents can choose between imitation and best-reply decision rules. We describe conditions under which altruistic and spiteful (maximizing) behavior arise: these conditions are established for any number of neighbors and any total number of agents in the population. Given mistake-free play, (short-run) outcomes are identical whether agents are constrained to employ an imitation rule only; or they can choose between imitation and best-reply rules. Given the possibility of mistakes, (long-run) outcomes vary across these two scenarios. The paper suggests how to provide public goods and gives an explanation of why we observe seemingly irrational cooperation - altruistic behavior - in the rational world. JEL: C70 C72 C73

  13. Modern Economic Growth and Quality of Life: Cross Sectional and Time Series Evidence Date: 2007-04 By: Richard A. Easterlin (University of Southern California and IZA) Laura Angelescu (University of Southern California) URL:

    To what extent are improvements in quality of life (material living levels, health, education, political and civil rights, happiness, and the like) associated with economic growth? International comparisons of quality of life (QoL) conditions almost always point to a strong positive association with real GDP per capita. Historical experience, however, frequently belies the results of these comparisons. More often than not the timing of various improvements in QoL, material living levels excepted, is different from that in real GDP per capita - some indicators preceding, others following. Moreover, the sequence of improvements in various aspects of QoL is not always the same from one part of the world to another. And sometimes, as in the case of happiness and life satisfaction, QoL indicators remain unchanged despite a doubling or more of real GDP per capita. In contrast to the results of simple international point-of-time comparisons, history sugsts that improvements in many realms of life are not an automatic result of economic growth. Keywords: quality of life, well-being, economic growth, international and historical comparisons JEL: N30 O57 D60 Y1

  14. How Much Do Perceptions of Corruption Really Tell Us? Date: 2007 By: Weber Abramo, Claudio URL:

    Regressions and tests performed on data from Transparency International Global Corruption Barometer 2004 survey show that personal or household experience of bribery is not a good predictor of perceptions held about corruption among the general population. In contrast, perceptions about the effects of corruption correlate consistently among themselves. However, no consistent relationship between opinions about general effects and the assessments of the extent with which corruption affects the institutions where presumably corruption is materialized is found. Countries are sharply divided between those above and below the US$ 10,000 GDP per capita line in the relationships between variables concerning corruption. Among richer countries, opinions about institutions explain very well opinions concerning certain effects of corruption, while among poorer countries the explanatory power of institutions for the effects of corruption falls. Furthermore, sts for dependence applied between the variables in the sets of respondents for each of 60 countries also show that, for most of them, it is likely that experience does not explain perceptions. On the other hand, opinions tend to closely follow the trend of other opinions. Additionally, it is found that in the GCB opinions about general effects of corruption are strongly correlated with opinions about other issues, as much as to justify the hypothesis that it would suffice to measure the average opinion of the general public about human rights, violence etc. to accurately infer what would be the average opinion about least petty and grand corruption. The findings reported here challenge the value of perceptions of corruption as indications of the actual incidence of the phenomenon. Keywords: corruption, perceptions, corruption indicators JEL: D73 H11 K42

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