Social Capital and Incentive Compatibility: Modelling the Accumulation and Use of Social Collateral
AbstractIn economics, where the long resistance to reflecting on the effects of social interaction on economic behaviour is slowly waning, the concept of social capital may turn out to be a useful analytical tool. However, initial interest in social capital has produced a large variety of definitions, theoretical frameworks, empirical analyses, and even policy prescriptions. This paper provides a selective review and critique of some of the more recent literature on social capital. It then suggests that many of the problems in the existing literature can be addressed by lowering aspirations about what social capital is and reformulating it in terms of its impact on incentive problems in economic transactions in the presence of imperfect markets and costly or non-enforceable contracts. The paper finally advances a model of one of the ways that social capital resolves incentive compatibility problems, namely its role as a collateral asset.
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Bibliographic InfoPaper provided by University of Wisconsin, Agricultural and Applied Economics in its series Staff Paper Series with number 460.
Date of creation: Sep 2003
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- Tewodaj Mogues & Michael R. Carter, 2005. "Social Capital and Incentive Compatibility: Modelling the Accumulation and Use of Social Collateral," Others 0512008, EconWPA.
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