Social hierarchy is persistent in all almost all societies. Social norms and their enforcement are part of sustaining hierarchical systems. This paper combines social status and norm enforcement, by introducing status in a dictator game with third party punishment. Status is conveyed by surname;...

We study the relationship between ethnic identity and labor-market outcomes of non-EU immigrants in Europe. Using the European Social Survey, we find that there is a penalty to be paid for immigrants with a strong identity. Being a first generation immigrant leads to a penalty of about 17...

We propose a novel mechanism to facilitate understanding of systemic risk in financial markets. The literature on systemic risk has focused on two mechanisms, common shocks and domino-like sequential default. Our approach is a formal model that provides an intellectual combination of the two by...

We examine how interaction choices depend on the interplay of social and physical distance, and show that agents who are more central in the social network, or are located closer to the geographic center of interaction, choose higher levels of interactions in equilibrium. As a result, the level...

We analyze delinquent networks of adolescents in the United States. We develop a theoretical model showing who the key player is, i.e. the criminal who once removed generates the highest possible reduction in aggregate crime level. We also show that key players are not necessary the most active...

The aim of this paper is to provide a new mechanism based on social interactions explaining why distance to jobs can have a negative impact on workers’ labor-market outcomes, especially ethnic minorities. Building on Granovetter’s idea that weak ties are superior to strong ties for providing...

This paper discusses the case for expanding active labor market policy in recession. We find that there is reasonable case for relying more heavily on certain kinds of programs. The argument is tied to the varying size of the lock-in effect in boom and recession. If programs with relatively...

A fair price model in which firms are hesitant to raise their prices due to concerns about adverse consumer reactions is developed and integrated into the standard New Keynesian framework. In the model, monetary neutrality arise as a combination of a fairness constraint putting a limit on how...

This paper develops a theoretical model of trade and environmental emissions with heterogeneous firms, where firms make abatement investments and thereby affect their level of emissions. We show that investments in abatement are positively related to firm productivity and firm exports, while...

We develop a stochastic dynamic model of bank value maximization under limited liability and in which bankruptcy can occur. Main issues are banks’ optimal responses to regulation and credit-losses. We show that risk-neutral banks behave as if they were risk-averse when they are...