Social network formation models are often compared by their network structures, which satisfy specific equilibrium or welfare properties. Here, we concentrate on welfare criteria and define properties of utility function which are causal for certain network structures. We hope the identification of different properties of utility function will enhance the understanding of the relationship of di...

We propose a model of cycles of conflict and distrust. Overlapping generations of agents from two groups sequentially play coordination games under incomplete information about whether the other side consists of bad types who always take bad actions. Good actions may be misperceived as bad and information about past actions is limited. Conflict spirals start as a result of misperceptions but al...

We discuss survey evidence on individuals’ willingness to sanction norm violations – such as evading taxes, drunk driving, fare dodging, or skiving off work – by expressing disapproval or social exclusion. Our data suggest that people condition their sanctioning behavior on their belief about the frequency of norm violations. The more commonly a norm violation is believed to occur, the lower th...

The paper analyses the interaction between economic incentives and work norms in the context of social insurance. If the work norm is endogenous in the sense that it is weaker when the population share of beneficiaries is higher, then voters will choose less generous benefits than otherwise. We also discuss welfare-state dynamics when there is a time lag in the adjustment of the norm in respons...

Enforcement problems are frequently acute in illegal transactions, such as bribery. However, if a government official and a member of the public share informal social or economic ties, this may enable them to enforce bribe transactions by “linking the games”. As a result, official’s incentives to engage in corruption may be affected by the social structure of the society in which they are embed...

This paper provides an empirical analysis of the association between corruption perception and the willingness to offer bribes, as well as of the influence of different sources of information on corruption perception in the Ukraine. The higher the perceived corruption in an organization, the more probable it is that a person dealing with that organization will offer a bribe, therefore supportin...

This research examines the strength of people’s ties with close neighbours and the sensitivity thereof to changes in residential mobility, access to modes of public and private transport, and changes in the availability of modern communications technologies using the German Socio-economic Panel Study (SOEP). All forms of mobility have increased over time and are negatively associated with visit...

We report the results of experiments designed to test the impact of social status on learning in a coordination game. JEL codes: C92, C7, Z13 *Thanks to the participants in the Coordination Success Conference in Honor of Raymond Battalio for insightful suggestions. Chuck Manski and Thomas Schelling provided valuable comments on an earlier draft. Research assistance was provided by Christy Aroop...

Social sanctions may be a strong deterrent of crime. This paper presents a formal model that relates crime and social sanction to social interaction density. We empirically test the theoretical predictions using a provincial level panel dataset on different crimes in Italy between 1996 and 2003. We exploit detailed demographic and geo-morphological information to develop exogenous measures of s...

Optimal Incentive Contracts under Inequity Aversion We analyze the Moral Hazard problem, assuming that agents are inequity averse. Our results differ from conventional contract theory and are more in line with empirical findings than standard results. We find: First, inequity aversion alters the structure of optimal contracts. Second, there is a strong tendency towards linear sharing rules. Thi...