The Value of Groups

Hargreaves Heap, Shaun P.; Zizzo, Daniel John

doi:10.2139/ssrn.951619

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The Value of Groups

41 Pages Posted: 14 Dec 2006

See all articles by Shaun P. Hargreaves Heap

Shaun P. Hargreaves Heap

University of East Anglia (UEA) - School of Economic and Social Studies

Daniel John Zizzo

University of Queensland - School of Economics

Date Written: December 2006

Abstract

We present the results of an experiment where we try to measure the social value of groups. Agents interact with insiders and outsiders in trust games settings and periodically enter markets where they can trade group membership. We found that trust fell when there were groups because of negative discrimination against outsiders. Against this there is evidence that group membership is the source of a psychological benefit, although this may induce social inertia. Overall, the 'pure' effects of groups on welfare are at best neutral and could be negative, pointing to the potential perverse effects of group-based social capital.

Keywords: groups, trust games, social capital, welfare

JEL Classification: C72, C91, Z13

Suggested Citation: Suggested Citation

Hargreaves Heap, Shaun and Zizzo, Daniel John, The Value of Groups (December 2006). Available at SSRN: https://ssrn.com/abstract=951619 or http://dx.doi.org/10.2139/ssrn.951619