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

Tewodaj Mogues () and Michael Carter

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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

Keywords: Social Capital; Incentive Compatibility; Social Collateral; Credit (search for similar items in EconPapers)
JEL-codes: O (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-soc
Date: 2005-12-08
Note: Type of Document - pdf; pages: 36
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Working Paper: Social Capital and Incentive Compatibility: Modelling the Accumulation and Use of Social Collateral (2003) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpot:0512008

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