Rise and Decline of Social Capital
AbstractIn order to explain excess co-operation in the one-shot prisoner's dilemma game, we first question the standard assumption of stable and selfish preferences by introducing the concept of social capital. This analysis leads to a model that explains excess co-operation through an accumulation of social capital. We allow preferences and norms to change over time and hence endogenise them. Our results depend on individuals being able to acquire enough information to allow them to ascertain the social norm that fellow individuals subscribe to. However, our results do not depend on any assumptions about group size and no ostracism is required to generate co-operation. Our model produces three hypotheses about the emergence and stability of social capital and co-operation in society. First, neither unconditional cooperation nor universal defection is stable; second, for co-operation to be stable some individuals must be reciprocal in nature; third, we identify a 'rise and decline of social capital' which gives a cyclical pattern of co-operation in society. These findings may form the basis for future theoretical and empirical research.
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Bibliographic InfoPaper provided by University of Aarhus, Aarhus School of Business, Department of Economics in its series Working Papers with number 03-10.
Length: 23 pages
Date of creation: 07 Jan 2003
Date of revision:
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Postal: The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark
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Fax: +45 8615 5175
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More information through EDIRC
Social capital; co-operation; selfishness; reciprocity; altruism; preference dynamic; Prisoner's Dilemma;
Find related papers by JEL classification:
- A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
- C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- D60 - Microeconomics - - Welfare Economics - - - General
- D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-01-18 (All new papers)
- NEP-CBE-2004-01-18 (Cognitive & Behavioural Economics)
- NEP-CDM-2004-01-18 (Collective Decision-Making)
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