Modeling social interactions: Identification, empirical methods and policy implications

Social interactions occur when agents in a network affect other agents’ choices directly, as opposed to via the intermediation of markets. The study of such interactions and the resultant outcomes has long been an area of interest across a wide variety of social sciences. With the advent of electronic media that facilitate and record such interactions, this interest has grown sharply in the business world as well. In this paper, we provide a brief summary of what is known so far, discuss the main challenges for researchers interested in this area, and provide a common vocabulary that will hopefully engender future (cross disciplinary) research. The paper considers the challenges of distinguishing actual causal social interactions from other phenomena that may lead to a false inference of causality. Further, we distinguish between two broadly defined types of social interactions that relate to how strongly interactions spread through a network. We also provide a very selective review of how insights from other disciplines can improve and inform modeling choices. Finally, we discuss how models of social interaction can be used to provide guidelines for marketing policy and conclude with thoughts on future research directions.     

Perceived Organizational Motives and Consumer Responses to Proactive and Reactive CSR

Corporate social responsibility (CSR) has emerged as an effective way for firms to create favorable attitudes among consumers. Although prior research has addressed the direct influence of proactive and reactive CSR on consumer responses, this research hypothesized that consumers’ perceived organizational motives (i.e., attributions) will mediate this relationship. It was also hypothesized that the source of information and location of CSR initiative will affect the motives consumers assign to a firms’ engagement in the initiative. Two experiments were conducted to test these hypotheses. The results of Study 1 indicate that the nature of a CSR initiative influences consumer attribution effects and that these attributions act as mediators in helping to explain consumers’ responses to CSR. Study 2 suggests that the source of the CSR message moderates the effect of CSR on consumer attributions. The mediating influence of the attributions as well as the importance of information source suggests that proper communication of CSR can be a viable way to inculcate positive corporate associations and purchase intentions.     

Commonality in Codes of Ethics

We create a database of company codes of ethics from firms listed on the Standard & Poor’s 500 Index and, separately, a sample of small firms. The SEC believes that “ethics codes do, and should, vary from company to company.” Using textual analysis techniques, we measure the extent of commonality across the documents. We find substantial levels of common sentences used by the firms, including a few cases where the codes of ethics are essentially identical. We consider these results in the context of legal statements versus value statements. While legal writing often mandates duplication, we argue that value-based statements should be held to a higher standard of originality. Our evidence is consistent with isomorphic pressures on smaller firms to conform.     

The Perceptions of Ethical and Sustainable Leadership

Sustainable and ethical leadership in the financial industry expand in importance since the financial crisis of 2007–2009. This research examined the level of sustainable and ethical leadership of leaders in mortgage loan originator (MLO) organizations, as perceived by loan originators. The Perceived Leadership Survey (PLIS) developed by Craig and Gustafson (Leadersh Q 9(2):127–145, 1998) and the Sustainable Leadership Questionnaire (SLQ) developed by McCann and Holt (Int J Sustain Strat Manage 2(2):204–210, 2011) were utilized for this research. The survey results yielded high levels of both ethical and sustainable leadership. Employees also felt their leadership was encouraging ethical and sustainable behavior. However, correlations between the PLIS and SLQ did not prove to be dependent or closely correlated.     

Institutionalized pollution havens

A multiple-principal, multiple-agent lobby group model suggests that the effect of foreign direct investment (FDI) on environmental policies is conditional on the structure of host countries' political institutions such as the number of legislative units (veto players). The model also yields the novel concept of “aggregate honesty” which combines veto players and corruption. FDI raises environmental policy stringency where the number of legislative units are many (aggregate honesty is high), but reduces it where the legislative units are few (aggregate honesty is low). Our panel data evidence is fully consistent with these predictions. An additional contribution is to show the empirical importance of endogenizing environmental policy in Pollution Haven Hypothesis studies. Only when treated as endogenous does environmental policy have a significant negative effect on FDI.     

Non-existence of equilibrium in Vickrey, second-price, and English auctions

A simple example shows that equilibria can fail to exist in second price (Vickrey) and English auctions when there are both common and private components to bidders’ valuations and private information is held on both dimensions. The example shows that equilibrium only exists in the extremes of pure private and pure common values, and that existence in standard models is not robust to a slight perturbation.