Location: 

368A Heady Hall

Time: 

27 Feb 2012, 4:10 pm - 5:30 pm

Contact Person: 

Rosenblat, Tanya

Description: 

"A meeting of the minds: contracts and social norms," Erin Krupka, University of Michigan

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Abstract: In this paper we demonstrate that incomplete contracts induce specific social norms of obligation. We employ a new experimental method to measure social norms directly via an incentive-compatible mechanism that exploits a key feature of norms: they are collectively help perceptions of the appropriateness of behavior. We find that handshake agreements substantially change the social norm in three ways. First, taking the promised action becomes substantially more appropriate, and all other actions become less appropriate. Second, the handshake agreement increases the consensus across individuals about which action is the most appropriate. Third, in the Bertrand Game the handshake agreement replaces a norm of risk minimization with a norm of obligation. Our results shed new light on one mechanism by which incomplete contracts persist and can outperform complete contracts. Finally we combine choice data for these games with the social norms elicited using the incentive compatible norm elicitation technique to predict changes in behavior across conditions and games. We show that a utility model that includes social norms as an additional motivation does much better predicting behavior than models which include only monetary utility and social preferences for fairness.

Erin Krupka is an assistant professor at the School of Information. She is an experimental behavioral economist who explores the ways in which social incentives and environmental factors influence behavior, using both laboratory and field experiments. Before joining the School of Information as an assistant professor at the University of Michigan in 2009, Dr. Krupka graduated from Carnegie Mellon University and joined IZA (a Labor Economics Research Institute) in Bonn, Germany, as a post doc.

Though firmly grounded in economics, one of the hallmarks of her research agenda is the synthesis of theory and findings stemming from social science multiple disciplines. Her research on social norms suggests why individuals might engage in behaviors that appear inconsistent with self-interest and suggests why trivial modifications to a decision context can change behavior significantly. In addition, she has developed a new protocol for measuring and identifying social norms that researchers and practitioners can use to answer important questions regarding the emergence, maintenance, content and transmission of social norms. Broadly, her work contributes to the emerging literature that models the sway of non-wealth factors on choice, by using social norms to raise the “psychological cost” of selfishness. This work is directly relevant to the incentive-centered design of information systems, an approach pioneered by faculty at the School of Information.

Bob R. Holdren was born September 13, 1922, in Pendleton, Indiana. He received his BA degree in 1948 and his M.A. degree in 1948 from Indiana University. In 1959 he received his PhD from Yale University. His PhD dissertation on "The Structure of a Retail Market and the Market Behavior of Retail Units" won an award from the Ford Foundation as an outstanding dissertation on the problems of business.

Prof. Holdren joined the Iowa State University staff in 1958. He served as a visiting professor at Indiana University in 1961, received a Ford Foundation Faculty Fellowship for 1966-1967, and was a consultant and expert witness for the Federal Trade Commission from 1973 to 1978.

With a commitment to good teaching, Professor Holdren displayed a genuine interest in both undergraduate and graduate students.