In this issue we feature 10 current papers on the theme of social capital:

This issue of NEP is sponsored by Cambridge University Press. Their recent book “Applied Nonparametric Econometrics” by Daniel Henderson and Christopher F. Par- meter bridges the gap between applied economists and theoretical nonparametric econometricians, covering density estimation, kernel regression, estimation with discreet data, with panel data, and instrumental variable models. Each chapter's methods are applied to actual data. Find out more at http://s.repec.org/1

In this issue we have:

1. Online social networks and trust - Sabatini, Fabio; Sarracino, Francesco
2. Culture, Ethnicity and Diversity - Desmet, Klaus; Ortuño-Ortín, Ignacio; Wacziarg, Romain
3. Corporate Culture, Societal Culture, and Institutions -Luigi Guiso; Paola Sapienza; Luigi Zingales
4. Entrepreneurship. How important are institutions and culturally-based prior beliefs? Ferrante, Francesco; Ruiu, Gabiele
5. Effects of the internet on participation : study of a public policy referendum in Brazil - Spada,Paolo; Mellon,Jonathan; Peixoto,Tiago Carneiro; Sjoberg,Fredrik Matias
6. The cognitive basis of social behavior: cognitive reflection overrides antisocial but not always prosocial motives -     Brice Corgnet; Antonio M. Espín; Roberto Hernán-González
7. A strategic model for network formation - Atabati, Omid; Farzad, Babak
8. Power of Joint Decision-Making in a Finitely-Repeated Dilemma - Kamei, Kenju
9. Empirical evidence on tax cooperation between sub-central administrations - José María Durán-Cabré; Alejandro Esteller-Moré; Luca Salvadori
10. Reciprocal beliefs and out-group cooperation: evidence from a public good game -  Brañas-Garza, Pablo; Coulson, Mark; Kernohan, David; Oyediran, Olusegun;  Rivas, M. Fernanda

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 1. Online social networks and trust

    Sabatini, Fabio

    Sarracino, Francesco

 We explore how participation in social networking sites (SNS) such as  Facebook and Twitter affects the most economically relevant aspect of social  capital, trust. We use measures of trust in strangers (or social trust),  trust in neighbours and trust in the police. We address endogeneity in the  use of SNS by exploiting the variation in the availability of broadband for  high-speed Internet, which relates to technological characteristics of the  pre-existing voice telecommunication infrastructures. We find that all the  proxies of trust significantly decrease with participation in online  networks. We discuss several interpretations of the results in light of the  specific features of Internet-mediated social interaction.

    Keywords: Internet; broadband; online networks; social networking sites;

     Facebook; trust; social capital; hate speech

    JEL: D89 O33 Z1 Z13 Z19

URL: http://d.repec.org/n?u=RePEc:pra:mprapa:62506&r=soc

 2. Culture, Ethnicity and Diversity

    Desmet, Klaus

    Ortuño-Ortín, Ignacio

    Wacziarg, Romain

 We investigate the empirical relationship between ethnicity and culture,  defined as a vector of traits reflecting norms, attitudes and preferences.

 Using surveys of individual values in 76 countries, we find that ethnic  identity is a significant predictor of cultural values, yet that within-group  variation in culture trumps between-group variation. Thus, in contrast to a  commonly held view, ethnic and cultural diversity are unrelated. We explore  the correlates of cultural diversity and of the overlap between culture and  ethnicity, finding that the level of economic development is positively  associated with cultural diversity and negatively associated with the overlap  between culture and ethnicity. Finally, although only a small portion of a  country's overall cultural heterogeneity occurs between groups, this does not  imply that cultural differences between groups are irrelevant. Indeed, we  find that civil conflict becomes more likely when there is greater overlap  between ethnicity and culture.

    Keywords: between-group diversity; civil conflict; cultural

     fractionalization; cultural traits; culture; ethnicity; heterogeneity;

     identity; social norms; within-group diversity

    JEL: D74 J15 P48 Z10

URL: http://d.repec.org/n?u=RePEc:cpr:ceprdp:10451&r=soc

 3. Corporate Culture, Societal Culture, and Institutions

    Luigi Guiso

    Paola Sapienza

    Luigi Zingales

 While both cultural and legal norms (institutions) help foster cooperation,  culture is the more primitive of the two and itself sustains formal  institutions. Cultural changes are rarer and slower than changes in legal  institutions, which makes it difficult to identify the role played by  culture. Cultural changes and their effects are easier to identify in  simpler, more controlled, environments, such as corporations. Corporate  culture, thus, is not only interesting per se, but also as a laboratory to  study the role of societal culture and the way it can be changed.

    JEL: K4 Z1

URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:20967&r=soc

 4. Entrepreneurship. How important are institutions and culturally-based

     prior beliefs?

    Ferrante, Francesco

    Ruiu, Gabiele

 Although there is still no consensus on the causes of large differences in  income per capita across countries, a growing literature considers  culturally-based beliefs and institutions as main drivers of the latter  differences (Guiso et al. 2006; Tabellini 2010). The intuition is that  institutions and beliefs affect the incentive to accumulate human and  physical capital. Other strands of literature stress that the supply of  entrepreneurship is a fundamental ingredient of economic growth and job  creation. In this paper, we argue that the two views should be reconciled on  the basis of the following arguments: a) occupational choices and the  decision to accumulate human capital are affected by cultural and  institutional factors; b) occupational choices are the main tool to allocate  human capital within societies; c) entrepreneurs govern the allocation of  resources in the economy, including the human resources. Confirming our  hypothesis, our empirical analysis show that cultural factors matter and  fatalism exerts a particularly negative effect on opportunity perception and  on opportunity driven entrepreneurship. For what regards institutional  variables, three interesting and somehow non conventional results emerge from  the analysis. First, low start-up cost are particular favorable for necessity  driven entrepreneurship but not for the opportunity driven ones. Second,  labor market flexibility yields a lower probability of being an entrepreneur  and this results holds for both necessity and opportunity driven  entrepreneurs. Third, the more burdensome the administrative requirement  (permits, regulations, reporting) in entrepreneurial activity, the lower the  probability of being an opportunity driven entrepreneur. On the whole, our  results yield some policy relevant implications: a) culturally-based beliefs  matter for entrepreneurship and fatalism is more important than trust in  others; b) education can affect people’s fatalism; c) entrepreneurial  education can be an important tool for fostering good quality  entrepreneurship, i.e. opportunity driven entrepreneurship; c) institutions  matter for entrepreneurship and growth but, somehow, in unconventional ways.

    Keywords: entrepreneurship, culture, fatalism, institutions

    JEL: E02 O43 L26 D83 M13 J20

URL: http://d.repec.org/n?u=RePEc:pra:mprapa:41915&r=soc

 5. Effects of the internet on participation : study of a public policy

     referendum in Brazil

    Spada,Paolo

    Mellon,Jonathan

    Peixoto,Tiago Carneiro

    Sjoberg,Fredrik Matias

 Does online voting mobilize citizens who otherwise would not participate?

 During the annual participatory budgeting vote in the southern state of Rio  Grande do Sul in Brazil -- the world's largest -- Internet voters were asked  whether they would have participated had there not been an online voting  option (i-voting). The study documents an 8.2 percent increase in total  turn-out with the introduction of i-voting. In support of the mobilization  hypothesis, unique survey data show that i-voting is mainly used by new  participants rather than just for convenience by those who were already  mobilized. The study also finds that age, gender, income, education, and  social media usage are significant predictors of being online-only voters.

 Technology appears more likely to engage people who are younger, male, of  higher income and educational attainment, and more frequent social media  users.

    Keywords: Technology Industry,Political Systems and Analysis,National

     Governance,ICT Policy and Strategies,Parliamentary Government

URL: http://d.repec.org/n?u=RePEc:wbk:wbrwps:7204&r=soc

 6. The cognitive basis of social behavior: cognitive reflection overrides

     antisocial but not always prosocial motives

    Brice Corgnet (Economic Science Institute, Argyros School of Business and

     Economics, Chapman University)

    Antonio M. Espín (Economics Department, Middlesex University Business

     School and Granada Lab of Behavioral Economics (GLoBE), Universidad de

     Granada)

    Roberto Hernán-González (Granada Lab of Behavioral Economics (GLoBE),

     Universidad de Granada and Business School, University of Nottingham)  Even though human social behavior has received considerable scientific  attention in the last decades, its cognitive underpinnings are still poorly  understood. Applying a dual-process framework to the study of social  preferences, we show in two studies that individuals with a more  reflective/deliberative cognitive style, as measured by scores on the  Cognitive Reflection Test (CRT), are more likely to make choices consistent  with “mild” altruism in simple non-strategic decisions. Such choices increase  social welfare by increasing the other person’s payoff at very low or no cost  for the individual. The choices of less reflective individuals (i.e. those  who rely more heavily on intuition), on the other hand, are more likely to be  associated with either egalitarian or spiteful motives. We also identify a  negative link between reflection and choices characterized by “strong”

 altruism, but this result holds only in Study 2. Moreover, we provide  evidence that the relationship between social preferences and CRT scores is  not driven by general intelligence. We discuss how our results can reconcile  some previous conflicting findings on the cognitive basis of social behavior.

    Keywords: dual-process; reflection; intuition; social preferences;

     altruism; spitefulness; prosocial behavior;antisocial behavior; inequality

     aversion

    JEL: C91 D03 D87

URL: http://d.repec.org/n?u=RePEc:chu:wpaper:15-04&r=soc

 7. A strategic model for network formation

    Atabati, Omid

    Farzad, Babak

 We study the dynamics of a game-theoretic network formation model that yields  large-scale small-world networks. So far, mostly stochastic frameworks have  been utilized to explain the emergence of these networks. On the other hand,  it is natural to seek for game-theoretic network formation models in which  links are formed due to strategic behaviors of individuals, rather than based  on probabilities. Inspired by Even-Dar and Kearns' model [8], we consider a  more realistic framework in which the cost of establishing each link is  dynamically determined during the course of the game. Moreover, players are  allowed to put transfer payments on the formation and maintenance of links.

 Also, they must pay a maintenance cost to sustain their direct links during  the game. We show that there is a small diameter of at most 4 in the general  set of equilibrium networks in our model. We achieved an economic mechanism  and its dynamic process for individuals which firstly; unlike the earlier  model, the outcomes of players' interactions or the equilibrium networks are  guaranteed to exist. Furthermore, these networks coincide with the outcome of  pairwise Nash equilibrium in network formation. Secondly; it generates  large-scale networks that have a rational and strategic microfoundation and  demonstrate the main characterization of small degree of separation in  real-life social networks. Furthermore, we provide a network formation  simulation that generates small-world networks.

    Keywords: network formation; linking game with transfer payments; pairwise

     stability; pairwise Nash equilibrium; small-world phenomenon

    JEL: C79 D85

URL: http://d.repec.org/n?u=RePEc:pra:mprapa:62529&r=soc

 8. Power of Joint Decision-Making in a Finitely-Repeated Dilemma

    Kamei, Kenju

 A rich body of literature has proposed that pairs behave significantly  differently from individuals due to a number of reasons such as group  polarization. This paper experimentally compares cooperation behaviors  between pairs and individuals in a finitely-repeated two-player public goods  game (continuous prisoner’s dilemma game). We show that pairs contribute  significantly more than individuals to their group accounts. Especially, when  two pairs are matched with each other for the entire periods, they  successfully build long-lasting cooperative relationships with their matched  pairs. Our detailed analyses suggest that the enhanced cooperation behavior  of pairs may be driven by (a) the mere fact that they have partners when they  make decisions, (b) group polarization – those who initially prefer to  contribute smaller amounts are more affected by the partners in their pairs,  and (c) stronger conditional cooperation behavior of pairs to their matched  pairs.

    Keywords: experiment, cooperation, dilemma, team work, public goods

    JEL: C91 C92

URL: http://d.repec.org/n?u=RePEc:pra:mprapa:62438&r=soc

 9. Empirical evidence on tax cooperation between sub-central administrations

    José María Durán-Cabré (Universidad de Barcelona & IEB)

    Alejandro Esteller-Moré (Universidad de Barcelona & IEB)

    Luca Salvadori (Universidad de Barcelona & IEB, TARC)  The literature on horizontal tax interdependence pays limited attention to  interactions in administrative policies, although they can play a large role  in determining the amount of tax revenues collected. We investigate the  incentives for sub-central tax authority cooperation in a decentralized  context, with the aim of identifying the determinants of that cooperation.

 Our results are congruent with standard theory; in particular, the existence  of reciprocity is essential for sharing tax information, but there is  sluggishness in this process, which is partly the result of the short-sighted  behaviour of tax authorities influenced by budget constraints. Hence, this is  good news for the functioning of a decentralized tax administration, as in  the medium-long run the gains to be made from sharing tax information are  achieved.

    Keywords: Tax information sharing, reciprocity, fiscal federalism

    JEL: H71 H77 H83

URL: http://d.repec.org/n?u=RePEc:ieb:wpaper:2013/6/doc2015-7&r=soc

10. Reciprocal beliefs and out-group cooperation: evidence from a public good

     game

    Brañas-Garza, Pablo

    Coulson, Mark

    Kernohan, David

    Oyediran, Olusegun

    Rivas, M. Fernanda

 This study examined latent racial prejudice towards specified out-groups  among 152 Spanish college students in a two-stage research strategy using a  public goods game. When asked how generous various out-groups are, Asian, and  Western groups were perceived as more generous than the in-group, whereas  African and Latin American groups were perceived as less generous. When  participants were incentivized, with payoff contingent on the accuracy of  guesses, and accuracy quantified as performance of the relevant groups in a  similar task to the one employed here, participants evidenced prejudice  against African and Latin American groups, and towards Asian and Western  groups. Models of racial beliefs were fitted for the four groups, however we  do not find satisfactory explanations for why questionnaire response and lab  behaviour did not match. Implications of the use of behavioural economic  games in prejudice research are discussed.

    Keywords: Beliefs; Prejudice; Public Goods Game

    JEL: C91 H41 J15

URL: http://d.repec.org/n?u=RePEc:pra:mprapa:62377&r=soc

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