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and Stephen Trejo for useful comments, and to the National Sci-ence Foundation for research support. 1.

We examine the dynamic formation and stochastic evolution of networks connecting individuals. The payoff to an individual from an economic or social activity depends on the network of connections among individuals. Over time individuals form and sever links connecting themselves to other

This essay provides a perspective on the trend towards integrating psychology into economics. Some topics are discussed, and arguments are provided for why movement towards greater psychological realism in economics will improve mainstream economics.

The potential usex of public resources and powers to improve the economic stuius of economic groups (such as industries and occupations) are analyzed to provide a scheme of the demand for regulation. The characteristics of the political process which allow relatively small groups to obtain

This paper shows that reciprocity has powerful implications for many economic domains. It is an important determinant in the enforcement of contracts and social norms and enhances the possibilities of collective action greatly. Reciprocity may render the provision of explicit incentive inefficient

—the currency crisis deepens the banking crisis, activating a vicious spiral; financial liberalization often precedes banking crises. The anatomy of these episodes suggests that crises occur as the economy enters a recession, following a prolonged boom in economic activity that was fueled by credit, capital

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This paper presents evidence that “social capital ” matters for measurable economic performance, using indicators of trust and civic norms from the World Values Surveys for a sample of 29 market economies. Memberships in formal groups—Putnam’s measure of social capital—is not associated with trust

2.2.2 Start-up of the Experimenter PC............................................................................................... 9 2.2.3 Start-up of the Subject PCs....................................................................................................... 9