Social Capital or Economic Rents? An Experimental Study

This paper presents the first experimental test of a new view on Social Capital. By contrast with the usual interpretations as a term describing trust, social norms, networks and/or social preferences, we define Social Capital as agents' willingness to share economic rents. To investigate on the influence of economic rents on cooperative behavior, we set up and test experimentally a simple theoretical model in which agents, facing different sets of economic opportunities (`projects'), have to decide whether to take one or more of them. The decision to take only one project implies `cooperation', as it leaves enough for the others; opting for more than one project implies `defection', as others are left with fewer opportunities to earn. The various experimental treatments differ in the size of rents (that is, the difference in economic value between one's first and second-best opportunities) available in the economy. For both extremes of rent sizes (the very small and the very large ones), we observe behavior close to our theoretical conjecture (full defection in the case of small-size rents, full cooperation in the case of large-size rents). For intermediate rent-size, however, our evidence reveals higher cooperation levels than predicted. We also discuss our results against the background of the ongoing debate on the measurability of Social Capital.