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Repeated Interactions and the Social Network Multiplier

Adam Szeidl and Markus Mobius ()

No 330, 2010 Meeting Papers from Society for Economic Dynamics

Abstract: We build a model of social capital in networks based on repeated interactions. The strength of a relationship in part derives from the value of transactions it enables in the future. We show that shocks can be amplified through a network multiplier, because trust withdrawal that constrains exchange locally can lead to further trust withdrawals that ripple through the network. New technologies that limit social interaction, such as the television, can substantially reduce trust and social capital through this mechanism.

Date: 2010
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More papers in 2010 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
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