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Linking Economic and Social-Exchange Games: From the Community Norm to CSR

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  • Masahiko Aoki

    (Economics Department, Stanford University)

Abstract

This paper proposes an approach to the roles of social norm dealing with economic externalities. Traditionally social norms are treated by economists as external constraints or endogenous outcomes of repeated economic transactions. In contrast, this paper formulates a game of social exchanges and characterizes the role of social norm in regulating a game of economic transactions as equilibrium of linked games. Advantage of this approach is manifold: it can clarify conditions for social norm to regulate economic externalities when endogenous reputation mechanisms fail as well as to facilitate, rather than deter, a change in economic institution. More specifically, it suggests a solution to the empirical paradox of why a corporate social responsibility program sometimes contributes to a firm's better stock market performance.

Suggested Citation

  • Masahiko Aoki, 2007. "Linking Economic and Social-Exchange Games: From the Community Norm to CSR," Discussion Papers 07-018, Stanford Institute for Economic Policy Research.
  • Handle: RePEc:sip:dpaper:07-018
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    File URL: http://www-siepr.stanford.edu/repec/sip/07-018.pdf
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    References listed on IDEAS

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    Cited by:

    1. Minghui Li & Faqin Lan & Fang Zhang, 2019. "Why Chinese Financial Market Investors Do Not Care about Corporate Social Responsibility: Evidence from Mergers and Acquisitions," Sustainability, MDPI, vol. 11(11), pages 1-34, June.
    2. Hami Amiraslani & Karl V. Lins & Henri Servaes & Ane Tamayo, 2023. "Trust, social capital, and the bond market benefits of ESG performance," Review of Accounting Studies, Springer, vol. 28(2), pages 421-462, June.
    3. Neva Štumberger & Urša Golob, 2016. "On the Discursive Construction of Corporate Social Responsibility in Advertising Agencies," Journal of Business Ethics, Springer, vol. 137(3), pages 521-536, September.
    4. Cheung, Adrian (Wai Kong), 2016. "Corporate social responsibility and corporate cash holdings," Journal of Corporate Finance, Elsevier, vol. 37(C), pages 412-430.
    5. Servaes, Henri & Tamayo, Ane, 2017. "The role of social capital in corporations: a review," LSE Research Online Documents on Economics 69209, London School of Economics and Political Science, LSE Library.

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    More about this item

    Keywords

    social norm; social capital; linked games; corporate social responsibility (CSR);
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities

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