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

Author

Listed:
  • 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

Suggested Citation

  • Tewodaj Mogues & Michael R. Carter, 2005. "Social Capital and Incentive Compatibility: Modelling the Accumulation and Use of Social Collateral," Others 0512008, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpot:0512008
    Note: Type of Document - pdf; pages: 36
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    References listed on IDEAS

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    1. Pilar Useche, 2016. "Who Contributes to the Provision of Public Goods at the Community Level? The Case of Potable Water in Ghana," Development Policy Review, Overseas Development Institute, vol. 34(6), pages 869-888, November.

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    More about this item

    Keywords

    Social Capital; Incentive Compatibility; Social Collateral; Credit;
    All these keywords.

    JEL classification:

    • O - Economic Development, Innovation, Technological Change, and Growth

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