Let's Get Personal: An International Examination of the Influence of Communication, Culture and ...

Let's Get Personal: An International Examination of the Influence of Communication, Culture and ...

26 Pages · 2006 · 535 KB · English

Request (PDF) | Let's Get Personal: | This paper identifies when other-regarding preferences (ORPs) such as trust, reciprocity and altruism will likely arise. We experimentally examine the influence of social distance and communication on ORPs in four countries. We demonstrate that country of origi

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Journal of Economic Behavior & Organization Vol 60 (2006) 373–398 Let’s get personal: An international examination of the inuence of communication, culture and social distance on other regarding preferences Nancy R Buchan a,∗ , Eric J Johnson b, Rachel TA Croson c aUniversity of Wisconsin–Madison, 3104 Grainger Hall, 975 University Avenue, Madison, WI 53706, USA bColumbia University, USA cUniversity of Pennsylvania, USA Received 24 June 2002; received in revised form 17 March 2004; accepted 22 March 2004 Available online 8 June 2005 Abstract This paper identies when otherregarding preferences (ORPs) such as trust, reciprocity and altru ism will likely arise We experimentally examine the inuence of social distance and communication on ORPs in four countries We demonstrate that country of origin signicantly inuences ORPs, but also nd mixed support for the relationship between ORPs and social distance; increasing social dis tance has the expected negative effect in the individually oriented US, but its effects internationally are different This interaction is explained by an individual’s cultural orientation Finally, we show strong evidence that personal but irrelevant communication signicantly increases ORPs © 2005 Elsevier BV All rights reserved JEL classification:C72; C91 Keywords:Trust; Reciprocity; International; Communication; Social distance Virtually every commercial transaction has within itself an element of trust(and) It can be plausibly argued that much of the economic backwardness in the world can be explained by a lack of mutual condenceArrow (1972), p 357 ∗Corresponding author Tel: +1 608 263 7720; fax: +1 608 262 0394 Email address:[email protected] (NR Buchan) 01672681/$ – see front matter © 2005 Elsevier BV All rights reserved doi:101016/jjebo200403017 374NR Buchan et al / J of Economic Behavior & Org 60 (2006) 373–398 Trust is at the root of any economic system based on mutually benecial exchange If a signicant number of people violated the trust upon which our interactions are based,our economy would be swamped into immobilityAlan Greenspan, Harvard University Commencement Address (1999) 1 Introduction Otherregarding preferences (ORPs) such as trust, reciprocity and altruism are integral elements in economic transactions between companies, between consumers and retailers, between employers and employees, and in determining economic per formance The concept of trust has been given a great deal of attention across an array of academic disciplines for its role in promoting cooperation among individuals and groups (Berg et al, 1995), and for its positive inuence on the economic performance of corporations (Barney and Hansen, 1994), geographic regions (Putnam, 1993), and even countries (Fukuyama, 1995)Knack and Keefer (1997)in their study of 29 market economies empirically demonstrate the link between trust and economic performance For each 10percentagepoint rise in their measure of trust, Knack and Keefer nd an increase in annual growth of per capita income of fourfths of a percentage point The concept of reciprocity has been invoked to explain the persistence of net works of personal, rather than anonymous, economic exchanges among tribal societies and modern day ones (Kranton, 1996) Empirically, it has been used to explain the persistence of cooperative actions in the absence of immediate incentives to coop erate (Hoffman and McCabe, 1998) The idea of reciprocity underlies theories of productquality assurance (Camerer, 1988) and labor markets (Akerlof, 1982) Fehr and colleagues have experimentally investigated this last application of reciprocity in labor markets extensively and conclude that reciprocal behavior can increase the set of enforceable contracts and help markets to achieve efciency gains (see egFehr et al, 1997) The concept of altruism or caring for others was formally modeled byBecker (1974) In these theories, the consumption by others appears positively as an argument in an indi vidual’s utility function Models of altruism have been used to explain intergenerational bequests (Becker), social security and other welfare systems (Coate, 1995), and helping behavior in the workplace (Rotemberg, 1994) A number of experiments have tested for the existence and malleability of altruistic preferences Many experiments use the dictator game in which one party simply chooses how to allocate money between himself and another (see Thaler and Camerer, 1995for a review of dictator game results) More recent research mod els an altruistic

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