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on Social Norms and Social Capital |
| By: | Guiso, Luigi; Sapienza, Paola; Zingales, Luigi |
| Abstract: | To explain the extremely long-term persistence (more than 500 years) of positive historical experiences of cooperation (Putnam 1993), we model the intergenerational transmission of priors about the trustworthiness of others. We show that this transmission tends to be biased toward excessively conservative priors. As a result, societies can be trapped in a low-trust equilibrium. In this context, a temporary shock to the return to trusting can have a permanent effect on the level of trust. We validate the model by testing its predictions on the World Values Survey data and the German Socio Economic Panel. We also present some anecdotal evidence that differences in priors across regions are reflected in the spirit of the novels that originate from those regions. |
| Keywords: | culture; social capital; trust |
| JEL: | E00 P26 Z1 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6657&r=soc |
| By: | Huck, Steffen; Lünser, Gabriele; Tyran, Jean-Robert |
| Abstract: | Arguing that consumers are the carriers of firms’ reputations, we examine the role of consumer networks for trust in markets that suffer from moral hazard. When consumers are embedded in a network, they can exchange information with their neighbours about their private experiences with different sellers. We find that such information exchange fosters firms' incentives for reputation building and, thus, enhances trust and efficiency in markets. This efficiency-enhancing effect is already achieved with a rather low level of network density. |
| Keywords: | consumer network; information conditions; moral hazard; reputation; trust |
| JEL: | C72 C92 D40 L14 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6624&r=soc |
| By: | Katleen Van Den Broeck |
| Abstract: | In an environment of strongly decreasing banana productivity, we analyse whether an increase in the average productivity of a reference group a farmer belongs to, has a positive effect on that individual farmer’s harvest. The increase in average productivity is supposedly caused by the adoption of productivity enhancing techniques. So we measure the externalities of a productivity increase in one farmer’s banana field. For our analysis we have data on three social groups, namely kinship members, neighbours and social insurance group members. We find the strongest social effects within kinship related groups. We do find exogenous social effects between neighbours: there is a positive effect of neighbours’ education level. But only within kinship related groups we find the true endogenous effects that produce the social multiplier in banana productivity. |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces0312&r=soc |
| By: | Thomas Kirchmaier; Konstantinos Stathopoulos |
| Abstract: | This paper investigates the relationship between a CEO’s social network, firm identity, and firm performance. There are two competing theories that predict contradictory outcomes. Following social network theory, one would expect a positive relation between social networks and firm performance, while agency theory in general and Bebchuk’s managerial power approach in particular predicts a negative relationship between social networks and firm performance. Based on a new and comprehensive measure of CEOs social networks, we observe for 363 non-financial firms in the UK that the size of a CEO’s social network affects firm performance negatively. Even so, growth companies are actively seeking CEOs with a large social network, which is in line with the social network theory. Still, we find evidence in support of the argument that well-connected CEOs use the power they obtain through their social network to the detriment of shareholders. |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:fmg:fmgdps:dp608&r=soc |
| By: | Reuben, E.; Suetens, S. (Tilburg University, Center for Economic Research) |
| Abstract: | We use a novel experimental design to examine the role of reputational concerns in explaining conditional cooperation in social dilemmas. By using the strategy method in a repeated sequential prisoners? dilemma in which the probabilistic end is known, we can distinguish between strategically and non-strategically motivated cooperation. Second movers who are strong reciprocators ought to conditionally cooperate with first movers irrespective of whether the game continues or not. In contrast, strategically motivated second movers conditionally cooperate only if the game continues and they otherwise defect. Experimental results, with two different subject pools, indicate reputation building is used around 30% of the time, which accounts for between 50% and 75% of all realized cooperative actions. The percentage of strong reciprocators varied between 6% to 23%. |
| Keywords: | cooperation;reputation building;strong reciprocity;repeated prisoners? dilemma |
| JEL: | C91 D01 D74 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:200833&r=soc |
| By: | Francois, Patrick |
| Abstract: | This paper analyzes the dynamic interaction between norms - internalized restraints on opportunistic behaviour - and institutions - restraints on such behaviour deriving from external enforcement. When individuals following a norm suffer pecuniary losses to doing so, the norm is eroded. Institutions, on the other hand, are strengthened when institution designers are rewarded for improving them. The dynamic interaction between these two factors leads to both good steady states with functioning institutions, widespread norm compliance, and trade, and bad steady states where trade breaks down, institutions are dysfunctional and beneficial norms are violated. The model here shows the situations that lead economies to converge on good steady states rather than bad ones; why countries with a history of institutional success are more likely to be successful in future, why countries with a history of failure will require better institutions to achieve even the same level of compliance, and why functional institutions may not be readily transplated from successful to unsuccessful countries. |
| Keywords: | Economic Development; Institutional Change; Social Norms |
| JEL: | O17 O43 Z10 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6735&r=soc |
| By: | Paul De Grauwe; Frauke Skudelny |
| Abstract: | This paper aims at contributing to the literature on the differences in the transmission processes within Euroland. We start from the proposition that there are ‘deep’ differences in the nature of social conflicts and in the way countries deal with these conflicts. We empirically test this effect for the EU-growth and introduce several proxies for social conflicts and conflict management. We then analyse (in addition to common growth variables) an EU wide shock and find that differences in the social conflict and the conflict management institutions contribute to different effects on economic growth. We conclude by presenting a model giving a theoretical foundation of the empirical results. |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces9913&r=soc |
| By: | Daniel Ayalew |
| Abstract: | We apply the set-up of limited commitment model to empirically test the role of informal risk-sharing networks using panel data on informal credit transactions from rural Ethiopia. The empirical estimates provide convincing evidence for the belief that enforcement problem limits the direct role of credit transactions in risk-sharing arrangements between rural households, whether the villages are ethnically homogeneous or not. We also find that households with more land have better access to the informal credit market and access is significantly improved through their participation in small group networks. But the informal credit market and the networks under consideration serve little purpose to the land poor households. These results, therefore, imply that full risk-sharing does not appear to materialize at the village level. |
| Keywords: | Risk-sharing; Limited commitment; Informal credit; Consumption smoothing |
| JEL: | D91 O12 Q12 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces0305&r=soc |
| By: | Fisher-Vanden, Karen; Thorburn, Karin S |
| Abstract: | Researchers debate whether environmental investments reduce firm value or can actually improve financial performance. We provide some first evidence on shareholder wealth effects of voluntary corporate environmental initiatives. Companies announcing membership in Climate Leaders and Ceres - two voluntary environmental programs related to climate change - experience significantly negative abnormal stock returns. The price decline is smaller in carbon-intensive industries, where regulatory actions are more likely, and for high book-to-market firms, suggesting that "green" expenditures crowd out growth-related investments. We also document insignificant announcement returns for portfolios of industry rivals. Overall, the environmental investments appear to conflict with shareholder value-maximization. This has far reaching implications since the U.S. government relies on voluntary initiatives to reduce the emissions of greenhouse gases. |
| Keywords: | capital expenditures; climate change; corporate social responsibility; environmentally responsible investing; shareholder wealth |
| JEL: | G31 G38 Q5 |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6698&r=soc |
| By: | Marco Pitzalis; Isabella Sulis; Mariano Porcu |
| Abstract: | The role played by ‘Cultural Capital’ is crucial in shaping students’ decisions with respect to the school university transition. This work is based on an ad hoc survey carried out on a sample of students enrolled in 2006 in the University of Cagliari. The ‘cultural capital’ is a latent variable which students are supposed to possess at a greater or lesser degree. It has been here operationalized in four sub-components: (i) built-up by activities made by students themselves; (ii) built up by activities made by students’ parents; (iii) transmitted by students’ parents; (iv) built-up by formal education experiences. Each sub-component has been evaluated via students’ responses to a battery of items in a questionnaire. Latent Class Analysis has been adopted in order to provide non arbitrary scaling of some of the sub-components and to sort out mutually exclusive classes of students, characterized by a different intensity of the latent variable. Moreover, Item Response Models have been used to assess the calibration of the questionnaire as an instrument to measure the cultural capital of the targeted population. |
| Keywords: | cultural capital, students’ transition, university, school, item response models, latent class analysis. |
| JEL: | C25 C49 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:cns:cnscwp:200805&r=soc |
| By: | Richard A. Easterlin |
| Abstract: | In the transition from socialism to capitalism in Eastern Europe life satisfaction has followed the V-shaped pattern of GDP but failed to recover commensurately. In general, increased satisfaction with material living levels has occurred at the expense of decreased satisfaction with work, health, and family life. Disparities in life satisfaction have increased markedly with those hardest hit being the less educated and persons over age 30; women and men have suffered about equally. The asymmetric response of life satisfaction to decreases in GDP in transition countries and increases in GDP in non-transition countries is arguably due to loss aversion. |
| Keywords: | Happiness, transition, capitalism, socialism, loss aversion |
| JEL: | I31 P5 P27 D60 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp94&r=soc |