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Economic Cooperation and Social Identity: Towards a Model of Economic Cross-Cultural Integration

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Abstract

In arguing that borders not only should be understood as economic barriers to trade, but also as cultural barriers to interaction, this paper attempts to operationalize a broader interpretation of borders with regards to economic cross-cultural integration. Thus, by formalizing the cultural effects of borders as mental distances (interpreted as social identities), and by using an agentbased simulation model, I analyze how the border affects, and is itself affected by, economic integration. The model is based on two regions separated by a border. Based on expected payoffs and mental distance, agents first choose whether to interact at home or to cross the border. Then, agents choose their action in a simple PD game based on a general disposition of trust, as well as the mental distance should the interaction partner be from across the border. The agent’s mental distance and trust level are then updated according to the agent’s experience of the interaction (positive or negative). The model generally reveals that underlying cultural processes may affect the success of economic integration considerably, and suggests that the success of the integration depends significantly (and in asymmetric ways) on mental distances between regions, on economically vs. culturally motivated behavior, and on collectivistic vs. individualistic characters of the regional cultures.

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  • Olsen, Karsten Bjerring, 2004. "Economic Cooperation and Social Identity: Towards a Model of Economic Cross-Cultural Integration," Working Papers 04-10, University of Aarhus, Aarhus School of Business, Department of Economics.
  • Handle: RePEc:hhs:aareco:2004_010
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    File URL: http://www.hha.dk/nat/wper/04-10_kbo.pdf
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    1. Eriksson, Tor & Moritz Kuhn, Johan, 2006. "Firm spin-offs in Denmark 1981-2000 -- patterns of entry and exit," International Journal of Industrial Organization, Elsevier, vol. 24(5), pages 1021-1040, September.
    2. Aycan Çelikaksoy & Helena Nielsen & Mette Verner, 2006. "Marriage migration: just another case of positive assortative matching?," Review of Economics of the Household, Springer, vol. 4(3), pages 253-275, September.
    3. Helena Skyt Nielsen & Marianne Simonsen & Mette Verner, 2004. "Does the Gap in Family-friendly Policies Drive the Family Gap?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(4), pages 721-744, December.
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    More about this item

    Keywords

    Agent-Based Modeling; Cooperation; Culture; Social Identity; Economic Integration;

    JEL classification:

    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • R19 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Other
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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