We consider a model in which each individual belonging to an ethnic minority group is embedded in a network of relationships and decides whether she wants to be integrated in the society. Each ...individual wants her behavior to agree with her personal ideal preference for integration but also wants her behavior to be as close as possible to the average integration behavior of her peers. We show that there is always convergence to a steady-state and characterize it. We also show that different preferences for integration may emerge in steady state depending on the structure of the network. Then, we consider an optimal tax/subsidy policy which aim is to reach a certain level of integration in the population.
This paper explores theoretically the role of the ruling elites in the rise of progressive taxation in Western countries in the early 20th century. We focus on their interaction with the level of ...inequality between the elites and other citizens. We analyse a stylized political economy dynamic model where (wealthy) elite make a decision on the taxes to be paid by non-elite (poorer) citizens and by themselves. A fraction of citizens are fiscal-reciprocators: they experience positive (negative) reciprocity under a progressive (regressive) tax system. This proportion of citizens evolves over time according to their relative payoff compared to materialist citizens. We show that the choice of tax structure depends on the value for the elite of the public good generated by tax revenues, the proportion of fiscal-reciprocators and on the level of inequality between elite and citizen incomes. Our results show a dynamic complementarity between the level of reciprocity in society and tax progressivity. Indeed, this complementarity only operates if inequality is sufficiently low. In this case a progressive tax culture will be achieved, otherwise a regressive tax culture will prevail.
•The elite make a decision on taxes and citizens make a decision on their tax compliance.•Civic culture (reciprocity) evolves according to a payoff-monotonic dynamics.•Inequality between the elite and citizens plays a key role in the choice of tax system.•Under elite domination a high inequality reduces the progressivity of the tax system.•Dynamic complementarity between reciprocity and tax system gives rise to hysteresis.
Trust and punishment Olcina, Gonzalo; Calabuig, Vicente
European Journal of Political Economy,
December 2021, 2021-12-00, 20211201, Letnik:
70
Journal Article
Recenzirano
This paper explores the impact of institutions on the evolution of preferences (culture) and on economic outcomes. Punishment institutions determine the capacity and the individual cost of punishing ...opportunistic behavior, while preferences are endogenous and can be influenced by a cultural transmission process that is conditioned by the existing punishment institutions. We investigate the interaction and evolution between the preferences for reciprocity or rewarding of the allocator and the preferences to punish hostile behaviour by the investor in a trust game with a costly punishment phase. Our main result provides a rationale for the existence of a strong positive relationship between the quality of society's punishment institutions and the levels of trust achieved. Trust only flourishes in the shadow of efficient sanctioning institutions. The driving force behind this result is that strong institutions are necessary to make the socialization of children towards punishment preferences worthwhile. However, there is no relationship between the level of trust and the distribution of social preferences. Even when there is a high proportion of punishers in the population, a high level of trust will not be obtained if there is not a well-functioning punishment institution.
•Institutions determine the capacity and the individual cost of punishment.•Punishment institutions require individuals with preferences for negative reciprocity.•Punishment institutions incentivize socialization on negative reciprocity preferences.•High levels of trust are achieved only under strong punishment institutions.•There is no relationship between the preference distribution and the levels of trust.
In this paper, we analyze a team trust game with coordinated punishment of the allocator by investors and where there is also a final stage of peer punishment. We study the effect of punishment on ...the reward and the investment decisions, when the effectiveness and cost of coordinated punishment depend on the number of investors adhering to this activity. The interaction takes place in an overlapping‐generations model with heterogeneous preferences and incomplete information. The only long‐run outcomes of the dynamics are either a fully cooperative culture (FCC) with high levels of trust and cooperation and fair returns or a non‐cooperative culture with no cooperation at all. The basin of attraction of the FCC is larger; the higher the institutional capacity of coordinated punishment, the higher the level of peer pressure and the smaller the individual cost of coordinated punishment.
In this work, we theoretically approach optimal taxing in a public good provision context in a society where wealth is Pareto distributed. Our main result shows that high levels of wealth inequality ...yield lower levels of tax compliance and, consequently, lower provision of public goods.
This paper analyzes the implementation of centralized sanctioning on free-riding behavior in societies where wealth heterogeneity leads to different individual incentives with respect to public ...goods. The decision on the implementation is made by a government representing a social class. We show that if the sanctioning institution can achieve contribution by the entire population, the government representing the poor will implement it more often. This will always be efficient. However, if the sanctioning institution only achieves contribution by part of the population, the government of a free-riding rich class can implement it more often. This may be inefficient.
Culture and team production Calabuig, Vicente; Olcina, Gonzalo; Panebianco, Fabrizio
Journal of economic behavior & organization,
05/2018, Letnik:
149
Journal Article
Recenzirano
•We analyze whether culture affects economic performance in team production.•Culture reflects the importance of the individualism/collectivism cultural dimension.•A more individualist culture is ...optimal in a more egalitarian team.•A more collectivist culture is optimal in teams with high average productivity.•A more individualist culture is optimal in a more heterogeneously-skilled team.
This paper addresses theoretically the question whether culture has an effect on economic performance in team production, and what would be an optimal team culture. The members of a team are guided both by economic incentives and by personal norms, weighed according to their prevailing level of materialism. We assume that personal norms evolve following a dynamic driven by a combination of psychological mechanisms such as consistency and conformism. The different vectors of materialism, consistency and conformism shared by the group result in a continuum of cultures characterized by different combinations of individualism and collectivism.
Team culture turns out to be a fundamental determinant for long term group performance. When income distribution is not completely egalitarian or the members of the team display heterogeneous levels of skills, there is an optimal culture that maximizes steady state team production and its characteristics depend on the specific distribution of income and skills. A high average productivity or a less egalitarian dispersion of remuneration require a more collectivist culture, while a high dispersion of individual productivity requires a more individualist culture.
The aim of this paper is to analyze if cooperation can be the product of cultural evolution in a two-stage coordination game, consisting of a production stage followed by a negotiation phase. We ...present an overlapping generations model with cultural transmission of preferences where the distribution of preferences in the population and the strategies are determined endogenously and simultaneously. There are several groups in the society; some of them play cooperatively and others do not. Socialization takes place inside the group, but there is a positive rate of migration among groups which parents anticipate. Our main result shows that all groups converge to the cooperative equilibrium.
Abstract Coordinated punishment occurs when punishment requires a specific number of punishers to be effective, otherwise, no damage will be inflicted on the target. While societies often rely on ...this punishment device, its benefits are unclear compared to uncoordinated punishment, where punishment decisions are substitutes. In this paper, we compare the efficacy of coordinated and uncoordinated punishment in a team investment game with two investors and one allocator. Our findings indicate that coordinated punishment results in higher levels of cooperation and reciprocity, as measured by the levels of joint investment and the return by allocators. Importantly, this does not translate into higher payoffs: investors use punishment more frequently when this is coordinated, which destroys the efficiency gains generated by the highest investment. In fact, our results suggest that the highest level of efficiency would be achieved if investors were not allowed to punish.
This article studies the emergence of cultural homogeneity in personal norms when the behavior of heterogeneous individuals is driven both by economic incentives and by personal norms. Agents ...participate in a team production game by choosing their level of costly effort. Norms evolve along the life cycle of the individuals according to two psychological forces: cognitive dissonance or consistency and informational conformity. The model sheds light on how primitive economic and behavioral parameters such as the distribution of skills, the income distribution, and the levels of materialism, conformism, and consistency in the group determine the long-run culture and its degree of cultural homogeneity.
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