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Social Capital

Paper Session

Friday, Jan. 3, 2020 2:30 PM - 4:30 PM (PDT)

Marriott Marquis, Vista
Hosted By: American Economic Association
  • Chair: Luigi Zingales, University of Chicago

Inspiring Regime Change

Mehdi Shadmehr
University of Chicago
Stephen Morris
Princeton University


We analyze how revolutionary leaders inspire participation in regime change. Drawing from sociological and historical literature, we model a leader's problem as designing reward schemes that assign psychological rewards to different anti-regime actions. Regime change occurs when the aggregate revolutionary effort from all citizens exceeds the uncertain regime's strength, about which citizens have private information. Citizens face a coordination problem in which each citizen has a private (endogenous) belief about the likelihood of regime change. Because optimistic citizens are easier to motivate, optimal inspiration entails optimal screening. Our approach decomposes this continuous action global game with endogenous rewards into two separate, tractable problems of coordination and screening. A key result is the emergence of a group akin to revolutionary vanguards, all of whom engage in the (endogenous) maximum level of revolutionary activity.

Perception Bias in Tullock Contests

Hangcheng Zhao
University of Pennsylvania
Jie Zheng
Tsinghua University
Jaimie Lien
Chinese University of Hong Kong


Players in a contest setting sometimes hold misperceptions about their winning chances. To understand the effects of such psychological biases on competitive behavior and outcomes, we analyze a two-player Tullock contest with contestants who may have perception biases about the effectiveness of their efforts. In the benchmark model in which only one player has a perception bias, we characterize the unique equilibrium, in which the other player benefits at the biased player's expense, and both individual effort and total effort are decreasing in the severity of perception bias in the directions of either underconfidence or overconfidence. If both players have perception biases, multiple equilibria may exist for underconfident contestants, and the monotonic relationship between bias and effort no longer holds. We additionally depart from the benchmark case by allowing players' valuations of the prize to differ. Our results show a surprising non-monotonic relationship between the total effort and the valuations of the players. The results contribute to the behavioral contest literature by offering a better understanding of how individuals behave under a psychological bias.

Thoughts and Prayers - Do They Crowd out Charity Donations?

Linda Thunstrom
University of Wyoming


For centuries, scholars have examined what motivates prosocial behavior. In the U.S., prosocial behavior is routinely accompanied by thoughts and prayers. Yet, the impact on prosocial behavior of such gestures is unknown. We examine how thoughts and prayers affect charity donations to victims of a major public risk -- natural disasters. Our analytical framework suggests both thoughts and prayers increase empathy for those receiving such gestures, which may positively impact donations. However, we also find that prayers on behalf of others are regarded as helpful to recipients – we identify them as a moral action -- which can generate a counter-veiling substitution effect on donations. On net, our framework suggests prayers crowd out donations to natural disaster victims, while thoughts do not. We test these predictions in three incentivized experiments with Red Cross donations to hurricane victims. Consistent with our model, our main experiment finds prayers reduce donations, while thoughts do not. Two follow-up experiments find results are robust to alternative hurricane locations but may be sensitive to other frames -- we find no impact of thoughts or prayers on donations when donations are capped at small amounts. Nevertheless, our results provide the novel insight that prayers may have important effects on material aid in the wake of public catastrophes (in two out of three experiments they crowd out donations), which highlights the importance of research on the impact of prayers on prosocial behavior.

​The Role of Social Norms in Old-Age Support: Evidence from China

Xuezhu Shi
University of International Business and Economics


Intergenerational old-age support within families is an important norm in developing countries, which typically lack comprehensive pension coverage. The transmission mechanism for this norm is potentially influenced by socioeconomic factors internal and external to the family, which the norm may in turn influence. This paper studies the inter-generational transmission of this social norm in China, focusing on the role of gender. The mechanism behind this transmission is that parents, by their provision of support to their own parents, shape their same-gender children's preference for old-age support. Given that the gender ratio of Chinese children is not random, I use an interaction term of the timing of the ban on sex-selective abortions in China and the gender of the first-born child as the instrumental variable for the gender of the children to alleviate the possible endogeneity. The empirical results, using two Chinese datasets, show that parents with more same-gender children provide more support to their ageing parents than parents with cross-gender ones. The father effect is more significant in rural subsamples, and the mother effect is seen mainly in the urban ones. The urban-rural difference in the results may indicate a normative shift accompanying economic and demographic changes.

Can Television Reduce Xenophobia? The Case of East Germany

Lars Hornuf
University of Bremen
Marc Rieger
University of Trier
Sven Hartmann


Can television have a mitigating effect on xenophobia? To examine this question, we exploit the fact that individuals in some areas of East Germany – due to their geographic location – could not receive West German television until 1989. Following intergroup contact theory, we conjecture that individuals who received West German television were exposed more frequently to foreigners and thus have developed less xenophobia. We show that regions that could receive West German television were less likely to vote for right-wing parties during the national elections from 1994 to 2017. We find political attitudes of the two groups to diverge more strongly over time. Furthermore, we evidence that the exposure to West German television is negatively related to the number of arson attacks against refugee housing and incidents regarding anti-refugee demonstrations, but had an overall positive effect on Germans’ attitudes towards refugees today, and is positively related to naturalizations.
JEL Classifications
  • D9 - Micro-Based Behavioral Economics