Alessandra Cassar

The effect of social capital on group loan repayment: evidence from field experiments

An important question to microfinance is the relevance of existing social capital in target communities to the performance of group lending. This research presents evidence from field experiments in South Africa and Armenia, in which subjects participate in trust and microfinance games. We present evidence that personal trust between group members and social homogeneity are more important to group loan repayment than general societal trust or acquaintanceship between members. We also find some evidence of reciprocity: those who have been helped by other group members in the past are more likely to contribute in the future.

Coordination and cooperation in local, random and small world networks: Experimental evidence

A laboratory experiment studies coordination and cooperation in games played in different networks - local, random and small-world. Coordination on the payoff-dominant equilibrium was faster in small-world networks than in local and random networks. However, in a prisoners dilemma game, cooperation was the hardest to achieve in small-world networks. Two graph-theoretic characteristics - clustering coefficient and characteristic path length - accounted for differences in individual behavior, possibly explaining why equilibrium convergence is most rapid in small-world networks.

War’s Enduring Effects on the Development of Egalitarian Motivations and In-Group Biases

In suggesting that new nations often coalesce in the decades following war, historians have posed an important psychological question: Does the experience of war generate an enduring elevation in people’s egalitarian motivations toward their in-group? We administered social-choice tasks to more than 1,000 children and adults differentially affected by wars in the Republic of Georgia and Sierra Leone. We found that greater exposure to war created a lasting increase in people’s egalitarian motivations toward their in-group, but not their out-groups, during a developmental window starting in middle childhood (around 7 years of age) and ending in early adulthood (around 20 years of age). Outside this window, war had no measurable impact on social motivations in young children and had only muted effects on the motivations of older adults. These “war effects” are broadly consistent with predictions from evolutionary approaches that emphasize the importance of group cooperation in defending against external threats, though they also highlight key areas in need of greater theoretical development.

Trust and trustworthiness in networked exchange

This paper focuses on the interaction between network structure, the role of information, and the level of trust and trustworthiness in 3-node networks. We extend the investment game with one Sender and one Receiver to networked versions -- one characterized by one Sender and two Receivers ([1s-2r]) and one characterized by two Senders and one Receiver ([2s-1r]) -- under two information conditions, full and partial. We develop a comparative model of trust for the networked exchange environments and generate two hypotheses: (1) what counts as a signal of trust depends on investment behavior along the other link in the network and (2) this type of trust can be leveraged under full information, increasing the rate of cooperation on the side of the exchange with multiple traders. The results generally support our hypotheses: trust is comparative and under full information, the [1s-2r] network shows higher trustworthiness and the [2s-1r] network displays higher trust.

Civil War, Social Capital and Market Development: Experimental and Survey Evidence on the Negative Consequences of Violence

Recent studies have reported surprising increases in pro-social behavior following exposure to conflict. However, our research provides cautionary evidence of some important detrimental effects of conflict hidden within an overall trend toward increasing certain pro-social preferences. We draw our inferences from experimental and survey evidence we collected from a random sample in post-war Tajikistan. More than a decade after the civil war, which was characterized by insurgency and community infighting, exposure to conflict has opened a significant gap between norms people apply to others in their local communities compared to distant others. Our results show how conflict exposure undermines trust and fairness within local communities, decreases the willingness to engage in impersonal exchange, and reinforces kinship-based norms of morality. The robustness of the results to the use of pre-war controls, village fixed effects and alternative samples suggests that selection into victimization is unlikely to be the factor driving the results.

Institutional quality, culture, and norms of cooperation: Evidence from behavioral field experiments

We examine the causal effect of legal institutional quality on informal norms of cooperation and study the interaction of institutions and culture in sustaining economic exchange. A total of 346 subjects in Italy and Kosovo played a market game under different and randomly allocated institutional treatments, which generated different incentives to behave honestly, preceded and followed by a noncontractible and nonenforceable trust game. Significant increases in individual trust and trustworthiness followed exposure to better institutions. A 1-percentage-point reduction in the probability of facing a dishonest partner in the market game, which is induced by the quality of legal institutions, increases trust by 7–11 percent and trustworthiness by 13–19 percent. This suggests that moral norms of cooperative behavior can follow improvements in formal institutional quality. Cultural origin, initial trust, and trustworthiness influence opportunistic behavior in markets, but only in the absence of strong formal institutions.

Competing for the benefit of offspring eliminates the gender gap in competitiveness

Significance Despite Darwin’s recognition of the importance of intrasexual competition, the topic of female competition has been largely ignored. Economists, looking for reasons why women are rarely found in top jobs, have accumulated experimental evidence pointing to women’s lower desire to compete than men. Consistent with newer interdisciplinary hypotheses about female competition, our experimental results show that women can compete as much as men once we change the experimental reward medium to something more in line with women’s goal: the benefit of one’s children. Our results have important policy implications: a change in the workplace incentive structure could induce more women to enter workplace competitions. Such findings matter for a broader group of scientists including biologists, anthropologists, psychologists, economists, and sociologists. Recent advances have highlighted the evolutionary significance of female competition, with the sexes pursuing different competitive strategies and women reserving their most intense competitive behaviors for the benefit of offspring. Influential economic experiments using cash incentives, however, have found evidence suggesting that women have a lower desire to compete than men. We hypothesize that the estimated gender differences critically depend on how we elicit them, especially on the incentives used. We test this hypothesis through an experiment with adults in China (n = 358). Data show that, once the incentives are switched from monetary to child-benefitting, gender differences disappear. This result suggests that female competition can be just as intense as male competition given the right goals, indicating important implications for policies designed to promote gender equality.

A Laboratory Investigation of Networked Markets

When contracts are not perfectly enforceable, can interpersonal networks improve market efficiency? We introduce certain exogenous networks into laboratory markets in which traders can cheat in ‘international’ but not in ‘domestic’ transactions. We examine four network configurations, one of which has the potential to achieve 100% efficiency. Theoretical upper bounds correctly predict the main qualitative trade patterns across our network configurations but overpredict observed efficiency. Our networks increase international trade volume, reduce domestic volume and divert high surplus transactions to international networks.

Social Cooperation and the Problem of the Conflict Gap: Survey and Experimental Evidence from Post-War Tajikistan

Our research provides experimental and survey evidence on the pro-social behavior (trust, reciprocity, a sense of fairness) and preferences for anonymous market transactions of former combatants. Our results, from a random sample in post-war Tajikistan, show that trust, reciprocity, generosity (dictator giving) are lowest among those respondents reporting having fought during the 1992-1997 Tajik civil war or anytime since its end, especially when the experimental treatment matches individuals with anonymous others from their local community. Consistent with the behavioral results, fighting is associated with lower trust towards any group outside the direct family, a lower willingness to engage in impersonal exchange and stronger kinship-based norms of morality. Replicating previous literature results, we find that ex-combatants are more likely to participate in groups and collective action but we caution that this may just capture political opposition, just as participating in combat did. Overall, our results point to a lasting “conflict gap” between combatants and non-combatants, even long after the end of the civil war, which question the rehabilitation of combatants.

Do Risky Microfinance Borrowers Really Invest in Risky Projects? Experimental Evidence from Bolivia

Abstract This paper reports the results of an experiment testing a fundamental assumption in Stiglitz and Weiss’ (1981) model of credit rationing: that defaulting borrowers are associated with investment in risky projects. Through an artefactual field experiment with 200 Bolivian microfinance borrowers, we observe that subjects from real-world delinquent borrowing groups do not prefer risky projects to safer ones significantly more than subjects from repaying groups. Instead, our results support more recent behavioural theories of credit market failure. Implications are that defaulting microfinance borrowers may be those who take too little investment risk rather than those who take too much.