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Signalling in Social Networks: An Empirical Study of Denominational Fractionalization in the USA

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Author Info
Mehmet Karacuka () (Department of Economics, Ege University)
Martin Leroch () (Institute of SocioEconomics, Universty of Hamburg)

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Abstract

An economic signalling model contributing to the explanation of religious schism is presented. Religious groups are interpreted as a device for exchanging information about and via others. Two effects result. First, the larger the network, the worse the signal quality one receives of the type of other members. Second, the larger a network, the more potentially valuable information is available. A modernizing economy is characterized by increasing overall transaction costs. Economizing on transaction costs by splitting from existing groups, and therefore increasing the signal value, could bear an economic advantage. Supporting empirical data are presented. In our view, our findings also contribute to the explanation of the so-called Kelley Thesis, stating that religious movements with stricter enforcement of their behavioural norms are growing in size, while such with rather liberal attitudes toward their norm enforcement face a loss of members. Supporting historical and empirical results are presented.

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File URL: http://iibf.ege.edu.tr/economics/papers/wp06-10.pdf
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File Function: First version, 2006
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Publisher Info
Paper provided by Ege University, Department of Economics in its series Working Papers with number 0610.

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Length: 21 pages
Date of creation: Dec 2006
Date of revision:
Handle: RePEc:ege:wpaper:0610

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Web page: http://www.iibf.ege.edu.tr/economics/
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Related research
Keywords: Kelley Thesis; Religion; Religious Groups; Schism; Signalling; Social Capital; Fractionalization;

Find related papers by JEL classification:
N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative
O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
R15 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods
Z12 - Other Special Topics - - Cultural Economics - - - Religion
Z13 - Other Special Topics - - Cultural Economics - - - Social Norms and Social Capital; Social Networks Economic Anthropology

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