Social norms, local interaction, and neighborhood planning

• 成果类型: Article
• 署名作者: Haag, M; Lagunoff, R
• 署名单位: Georgetown University; University of Warwick
• 刊物名称: INTERNATIONAL ECONOMIC REVIEW
• ISSN/ISSBN: 0020-6598
• DOI: 10.1111/j.1468-2354.2006.00379.x
• 发表日期: 2006
• 页码: 265-296
• 关键词: Repeated games; financial fragility; PRISONERS-DILEMMA; tiebout theory; folk theorem; public-goods; MODEL; networks; COMMUNICATION; provision

摘要

This article examines optimal social linkage when each individual's repeated interaction with each of his neighbors creates spillovers. Each individual's discount factor is randomly determined. A planner chooses a local interaction network or neighborhood design before the discount factors are realized. Each individual then plays a repeated Prisoner's Dilemma game with his neighbors. A local trigger strategy equilibrium (LTSE) describes an equilibrium in which each individual conditions his cooperation on the cooperation of at least one acceptable group of neighbors. Our main results demonstrate a basic trade-off in the design problem between suboptimal punishment and social conflict. Potentially suboptimal punishment arises in designs with local interactions since in this case monitoring is imperfect. Owing to the heterogeneity of discount factors, however, greater social conflict may arise in more connected networks. When individuals' discount factors are known to the planner, the optimal design exhibits a cooperative core and an uncooperative fringe.Uncooperative (impatient) types are connected to cooperative ones who tolerate their free riding so that social conflict is kept to a minimum. By contrast, when the planner knows only the ex ante distribution over individual discount factors, then in some cases the optimal design partitions individuals into maximally connected cliques (e.g., cul-de-sacs), whereas in other cases incomplete graphs with small overlap (e.g., grids) are possible.