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Social Capital and Incentive Compatibility: Modelling the Accumulation and Use of Social Collateral

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  • Tewodaj Mogues

    (International Food Policy Research Institute)

  • Michael R. Carter

    (University of Wisconsin - Madison)

Abstract

In 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 Info

Paper provided by EconWPA in its series Others with number 0512008.

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Length: 36 pages
Date of creation: 08 Dec 2005
Date of revision:
Handle: RePEc:wpa:wuwpot:0512008

Note: Type of Document - pdf; pages: 36
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Web page: http://128.118.178.162

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Keywords: Social Capital; Incentive Compatibility; Social Collateral; Credit;

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  2. Andrew D. Foster & Mark R. Rosenzweig, 2001. "Imperfect Commitment, Altruism, And The Family: Evidence From Transfer Behavior In Low-Income Rural Areas," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 389-407, August.
  3. Woolcock, Michael & Narayan, Deepa, 2000. "Social Capital: Implications for Development Theory, Research, and Policy," World Bank Research Observer, World Bank Group, vol. 15(2), pages 225-49, August.
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  7. Samuel Bowles & Astrid Hopfensitz, 2000. "The Co-evolution of Individual Behaviors and Social Institutions," Working Papers 00-12-073, Santa Fe Institute.
  8. Samuel Bowles, 1998. "Endogenous Preferences: The Cultural Consequences of Markets and Other Economic Institutions," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 75-111, March.
  9. Elster, Jon, 1989. "Social Norms and Economic Theory," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 99-117, Fall.
  10. John Maluccio & Lawrence Haddad & Julian May, 2000. "Social capital and household welfare in South Africa, 1993-98," Journal of Development Studies, Taylor & Francis Journals, vol. 36(6), pages 54-81.
  11. Durlauf,S.N., 1999. "The case "against" social capital," Working papers 29, Wisconsin Madison - Social Systems.
  12. Narayan, Deepa & Pritchett, Lant, 1997. "Cents and sociability : household income and social capital in rural Tanzania," Policy Research Working Paper Series 1796, The World Bank.
  13. Hashimoto, Masanori, 1981. "Firm-Specific Human Capital as a Shared Investment," American Economic Review, American Economic Association, vol. 71(3), pages 475-82, June.
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