There is one thing that moves online consumers to click “add to cart,” that allows sellers to accept certain forms of online payment, and that makes online product reviews meaningful: trust. Without trust, online interactions can’t advance. But how is trust among strangers established on the Internet? What role does reputation play in the formation of online trust? In eTrust, editors Karen Cook, Chris Snijders, Vincent Buskens, and Coye Cheshire explore the unmapped territory where trust, reputation, and online relationships intersect, with major implications for online commerce and social networking.

eTrust uses experimental studies and field research to examine how trust in anonymous online exchanges can create or diminish cooperation between people. The first part of the volume looks at how feedback affects online auctions using trust experiments. Gary Bolton and Axel Ockenfels find that the availability of feedback leads to more trust among one-time buyers, while Davide Barrera and Vincent Buskens demonstrate that, in investment transactions, the buyer’s own experience guides decision making about future transactions with sellers. The field studies in Part II of the book examine the degree to which reputation facilitates trust in online exchanges. Andreas Diekmann, Ben Jann, and David Wyder identify a “reputation premium” in mobile phone auctions, which not only drives future transactions between buyers and sellers but also payment modes and starting bids. Chris Snijders and Jeroen Weesie shift focus to the market for online programmers, where tough competition among programmers allows buyers to shop around. The book’s third section reveals how the quality and quantity of available information influences actual marketplace participants. Sonja Utz finds that even when unforeseen accidents hinder transactions—lost packages, computer crashes—the seller is still less likely to overcome repercussions from the negative feedback of dissatisfied buyers.

So much of our lives are becoming enmeshed with the Internet, where ordinary social cues and reputational networks that support trust in the real world simply don’t apply. eTrust breaks new ground by articulating the conditions under which trust can evolve and grow online, providing both theoretical and practical insights for anyone interested in how online relationships influence our decisions.

KAREN S. COOK is Ray Lyman Wilbur Professor of Sociology and the current chair of the sociology department at Stanford University.

CHRIS SNIJDERS is professor at the Eindhoven University of Technology.

VINCENT BUSKENS is associate professor in the Department of Sociology/ICS at Utrecht University.

COYE CHESHIRE is assistant professor at the School of Information at the University of California, Berkeley.

CONTRIBUTORS: Vincent Buskens, Coye Cheshire, Karen S. Cook, Chris Snijders, Judd Antin, Brandy Aven, Davide Barrera, Gary E. Bolton, Andreas Diekmann, Alexandra Gerbasi, Ben Jann, Tapan Khopkar, Azi Lev-On, Masafumi Matsuda, Uwe Matzat, Axel Ockenfels, Paul Resnick, Hiroyuki Takahashi, Yukihiro Usui, Sonja Utz, Jeroen Weesie, David Wyder, Toshio Yamagishi, and Noriaki Yoshikai.


A Volume in the Russell Sage Foundation Series on Trust

With the nation enjoying a remarkable long and robust economic expansion, AfricanAmerican employment has risen to an all-time high. Does this good news refute the notion of a permanently disadvantaged black underclass, or has one type of disadvantage been replaced by another? Some economists fear that many newly employed minority workers will remain stuck in low-wage jobs, barred from better-paying, high skill jobs by their lack of educational opportunities and entrenched racial discrimination. Prosperity for All? draws upon the research and insights of respected economists to address these important issues.

Prosperity for All? reveals that while African Americans benefit in many ways from a strong job market, serious problems remain. Research presented in this book shows that the ratio of black to white unemployment has actually increased over recent expansions. Even though African American men are currently less likely to leave the workforce, the number of those who do not find work at all has grown substantially, indicating that joblessness is now concentrated among the most alienated members of the population. Other chapters offer striking evidence that racial inequality is still pervasive. Among men, black high school dropouts have more difficulty finding work than their Latino or white counterparts. Likewise, the glass ceiling that limits minority access to higher paying promotions persists even in a strong economy. Prosperity for All? ascribes black disadvantage in the labor force to employer discrimination, particularly when there is strong competition for jobs. As one study illustrates, economic upswings do not appear to change racial preferences among employers, who remain less willing to hire African Americans for more skilled low-wage jobs.

Prosperity for All? offers a timely investigation into the impact of strong labor markets on low-skill African-American workers, with important insights into the issues engendered by the weakening of federal assistance, job training, and affirmative action programs.

ROBERT CHERRY is professor of economics at Brooklyn College and the Graduate Center of the City University of New York.

WILLIAM M. RODGERS III is chief economist of the U.S. Department of Labor. He is on leave from the College of William and Mary where he is the Frances L. and Edwin L. Cummings Associate Professor of Economics.

CONTRIBUTORS: Heather Boushey, Cecilia Conrad, Mary Corcoran, Sandra Danziger, Sheldon Danziger, William Darity Jr., Gregory E. DeFreitas,  Richard B. Freeman,  Colleen Heflin,  Joyce P. Jacobsen,  Chinhui Juhn,  Ariel Kalil,  Sanders Korenman, Laurence M. Levin,  Judith Levine, Philip Moss, Samuell L. Meyers Jr., Cordelia W. Reimers,  Daniel Rosen,  Kristin Seefeldt,  Kristine Siefert,  William E. Spriggs,  Chris Tilly,  Richard Tolman,  Rhonda M. Williams.  

In France, low wages have historically inspired tremendous political controversy. The social and political issues at stake center on integrating the working class into society and maintaining the stability of the republican regime. A variety of federal policies—including high minimum wages and strong employee protection—serve to ensure that the low-wage workforce stays relatively small. Low-Wage Work in France examines both the benefits and drawbacks of this politically inspired system of worker protection. France’s high minimum wage, which is indexed not only to inflation but also to the average increase in employee wages, plays a critical role in limiting the development of low-paid work. Social welfare benefits and a mandatory thirty-five hour work week also make life easier for low-wage workers. Strong employee protection is a central characteristic of the French model, but high levels of protection for employees may also be one of the causes of France’s chronically high rate of unemployment. The threat of long-term unemployment may, in turn, contribute to a persistent sense of insecurity among French workers. Low-Wage Work in France provides a lucid analysis of how a highly regulated labor market shapes the experiences of workers—for better and for worse.

ÈVE CAROLI is professor of economics at University Paris X.

JÉRÔME GAUTIÉ is professor of economics at the University of Paris 1 Panthéon-Sorbonne.

CONTRIBUTORS: Anne Marie Arborio, Philippe Askenazy, Mathieu Beraud, Jean-Baptiste Berry, Jacques Bouteiller, Lise Causse, Thierry Colin, Emilie Feriel, Benoit Grasser, Christine Guegnard, Annie Lamenthe, Philippe Mehaut, Sylvie-Anne Meriot, Philippe Mosse, Sophie Prunier-Poulmaire, Robert Solow.

A Volume in the RSF Case Studies of Job Quality in Advanced Economies

Considers how Americans define the quality of their life experiences, as expressed in their perceptions, evaluations, and satisfactions. Based on research conducted by the Institute for Social Research at the University of Michigan, the book uses data which are representative of the national population eighteen years of age and older, and employs the major social characteristics of class, age, education, and income. The authors cover such topics as the residential environment, the experience of work, marriage, and family life, and personal resources and competence. They also report on the situation of women and the quality of the life experience of black people.

ANGUS CAMPBELL is professor of psychology and sociology and director of the Institute for Social Research at the University of Michigan.

PHILIP E. CONVERSE is Robert C. Angell Professor of Political Science and Sociology and program director of the Center for Political Studies at the Institute for Social Research at the University of Michigan.

WILLARD L. RODGERS is senior study director of the Survey Research Center, Institute for Social Research, at the University of Michigan.

Now available in paperback, this provocative study examines the street-level decisions made by police, caught between a sometimes hostile community and a maze of departmental regulations. Probing the dynamics of three sample police departments, Brown reveals the factors that shape how officers wield their powers of discretion. Chief among these factors, he contends, is the highly bureaucratic organization of the modern police department.

A new epilogue, prepared for this edition, focuses on the structure and operation of urban police forces in the 1980s.

"Add this book to the short list of important analyses of the police at work....Places the difficult job of policing firmly within its political, organizational, and professional constraints...Worth reading and thinking about." —Crime & Delinquency

"An excellent contribution...Adds significantly to our understanding of contemporary police." —Sociology

"A critical analysis of policing as a social and political phenomenon....A major contribution." —Choice

MICHAEL K. BROWN is emeritus professor of politics, University of California, Santa Cruz

Winner of the 2000 James S. Coleman Best Book Award from the Rational Choice Section of the American Sociological Association

Institutions play a pivotal role in the economic functioning of any society. Understanding the foundation of social norms, networks, and beliefs within institutions is crucial to explaining much of what occurs in modern economies. Recently, economic sociologists have explored how ties among individuals and groups facilitate economic activity, while "institutional economists" have focused on the formal "rules of the game" that regulate economic processes via government and law. The New Institutionalism in Sociology argues that a full understanding of economic life will depend on blending these new lines of research on institutions with traditional sociological insights into the social structures that lie at their core.

The contributors to this volume explore many questions about the way institutions emerge and operate. How do grassroots mores and practices evolve to an institutional level? How do institutional norms then regulate economic activity, and what are the advantages of formal versus informal constraints? What are the sources of trust and cooperation in trading markets? What role do cultural networks play in the economic survival of immigrant communities? And how does conflict and bargaining affect the evolution of community norms?

The New Institutionalism in Sociology also discusses how economic fluctuations arise from interactions between local agencies and the institutional environment. Among the topics addressed here are the influence of labor activism on the distribution of income, the association between highly competitive "winner-take-all" job markets and increased wage inequality in the United States, and the effect of property right conventions on technical innovation and productivity in pre-industrial England. A final section explores how deeply embedded cultural traditions have colored the transition from state socialism to market economies in Eastern Europe.

The New Institutionalism in Sociology establishes a valuable template for a sociological conception of economic organization. Its interdisciplinary paradigm signals an important advance in understanding how institutions shape social and economic life.

MARY C. BRINTON is associate professor of sociology at the University of Chicago.

VICTOR NEE is Goldwin Smith Professor of Sociology and chair of the Department of Sociology at Cornell University.

CONTRIBUTORS: Robert C. Ellickson, Jean Ensminger, Robert Feenstra, Robert H. Frank, Avner Greif, Gary G. Hamilton, Rosemary L. Hopcroft, Paul Ingram, Takehiko Kariya, Jack Knight, Eric Kostello, Douglas C. North, Alejandro Portes, Julia Sensenbrenner, Ivan Szelenyi, Bruce Western. 

The mere word “bureaucracy” brings to mind images of endless lines, piles of paperwork, and frustrating battles over rules and red tape. But some bureaucracies are clearly more efficient and responsive than others. Why? In Teaching, Tasks, and Trust, distinguished political scientists John Brehm and Scott Gates show that a good part of the answer may be found in the roles that middle managers play in teaching and supporting the front-line employees who make a bureaucracy work.

Brehm and Gates employ a range of sophisticated modeling and statistical methods in their analysis of employees in federal agencies, police departments, and social service centers. Looking directly at what front-line workers say about their supervisors, they find that employees who feel they have received adequate training have a clearer understanding of the agency’s mission, which leads to improved efficiency within their departments. Quality training translates to trust – employees who feel supported and well-trained for the job are more likely to trust their supervisors than those who report being subject to constant monitoring and a strict hierarchy. Managers who “stand up” for employees—to media, government, and other agency officials—are particularly effective in cultivating the trust of their workers. And trust, the authors find, motivates superior job performance and commitment to the agency’s mission. Employees who trust their supervisors report that they work harder, put in longer hours, and are less likely to break rules. The authors extend these findings to show that once supervisors grain trust, they enjoy greater latitude in influencing how employees allocate their time while working.

Brehm and Gates show how these three executive roles are interrelated—training and protection for employees gives rise to trust, which provides supervisors with the leverage to stimulate improved performance among their workers. This new model—which frames supervisors as teachers and protectors instead of taskmasters—has widespread implications for training a new generation of leaders and creating more efficient organizations.

Bureaucracies are notorious for inefficiency, but mid-level supervisors, who are often regarded as powerless, retain tremendous power to build a more productive workforce. Teaching, Tasks, and Trust provides a fascinating glimpse into a bureaucratic world operating below the radar of the public eye—a world we rarely see while waiting in line or filling out paperwork.

JOHN BREHM is professor of political science at the University of Chicago.

SCOTT GATES is research professor at the International Peace Research Institute, Oslo, and professor at the Norwegian University of Science and Technology.

A Volume in the Russell Sage Foundation Series on Trust

In recent years, the German government has intentionally expanded the low-wage work sector in an effort to reduce exceptionally high levels of unemployment. As a result, the share of the German workforce employed in low-paying jobs now rivals that of the United States. Low Wage Work in Germany examines both the federal policies and changing economic conditions that have driven this increase in low-wage work. The new “mini-job” reflects the federal government’s attempt to make certain low-paying jobs attractive to both employers and employees. Employers pay a low flat rate for benefits, and employees, who work a limited number of hours per week, are exempt from social security and tax contributions. Other factors, including slow economic growth, a declining collective bargaining system, and the influx of foreign workers, also contribute to the growing incidence of low-wage work. Yet while both Germany and the United States have large shares of low-wage workers, German workers receive health insurance, four weeks of paid vacation, and generous old age support—benefits most low-wage workers in the United States can only dream of. The German experience offers an important opportunity to explore difficult trade-offs between unemployment and low-wage work.

GERHARD BOSCH is professor of sociology at the University of Duisburg-Essen.

CLAUDIA WEINKOPF is deputy director of the Institute for Work, Skills, and Training at the University of Duisburg-Essen.

CONTRIBUTORS: Lars Czommer, Karen Jaehrling, Thorsten Kalina, Robert Solow, Achim Vanselow, Dorothea Voss-Dahm.

A Volume in the RSF Case Studies of Job Quality in Advanced Economies

Why do consumer prices and wages adjust so slowly to changes in market conditions? The rigidity or stickiness of price setting in business is central to Keynesian economic theory and a key to understanding how monetary policy works, yet economists have made little headway in determining why it occurs. Asking About Prices offers a groundbreaking empirical approach to a puzzle for which theories abound but facts are scarce. Leading economist Alan Blinder, along with co-authors Elie Canetti, David Lebow, and Jeremy B. Rudd, interviewed a national, multi-industry sample of 200 CEOs, company heads, and other corporate price setters to test the validity of twelve prominent theories of price stickiness. Using everyday language and pertinent scenarios, the carefully designed survey asked decisionmakers how prominently these theoretical concerns entered into their own attitudes and thought processes. Do businesses tend to view the costs of changing prices as prohibitive? Do they worry that lower prices will be equated with poorer quality goods? Are firms more likely to try alternate strategies to changing prices, such as warehousing excess inventory or improving their quality of service? To what extent are prices held in place by contractual agreements, or by invisible handshakes?

Asking About Prices offers a gold mine of previously unavailable information. It affirms the widespread presence of price stickiness in American industry, and offers the only available guide to such business details as what fraction of goods are sold by fixed price contract, how often transactions involve repeat customers, and how and when firms review their prices. Some results are surprising: contrary to popular wisdom, prices do not increase more easily than they decrease, and firms do not appear to practice anticipatory pricing, even when they can foresee cost increases. Asking About Prices also offers a chapter-by-chapter review of the survey findings for each of the twelve theories of price stickiness. The authors determine which theories are most popular with actual price setters, how practices vary within different business sectors, across firms of different sizes, and so on. They also direct economists' attention toward a rationale for price stickiness that does not stem from conventional theory, namely a strong reluctance by firms to antagonize or inconvenience their customers. By illuminating how company executives actually think about price setting, Asking About Prices provides an elegant model of a valuable new approach to conducting economic research.

ALAN S. BLINDER is Gordon S. Rentschler Memorial Professor of Economics at Princeton University, where he has taught since 1971. He also founded and directs Princeton’s Center for Economic Policy Studies. He has served as vice chairman of the Board of Governors of the Federal Reserve System and as a member of the president’s Council of Economic Advisers.

ELIE R. D. CANETTI is an economist for the International Monetary Fund. He previously worked at the World Bank and the United States Treasury.

DAVID E. LEBOW is an economist at the Board of Governors of the Federal Reserve System.

JEREMY B. RUDD is senior economist at the Council of Economic Advisers, Washington, D.C.

One in four American adults doesn’t have a bank account. Low-income families lack access to many of the basic financial services middle-class families take for granted and are particularly susceptible to financial emergencies, unemployment, loss of a home, and uninsured medical problems. Insufficient Funds explores how institutional constraints and individual decisions combine to produce this striking disparity and recommends policies to help alleviate the problem.

Mainstream financial services are both less available and more expensive for low-income households. High fees, minimum-balance policies, and the relative scarcity of banks in poor neighborhoods are key factors. Michael Barr reports the results of an in-depth study of financial behavior in 1,000 low- and moderate-income families in metropolitan Detroit. He finds that most poor households have bank accounts, but combine use of mainstream services with alternative options such as money orders, pawnshops, and payday lenders. Barr suggests that a tax credit for banks serving primarily disadvantaged customers could facilitate greater equality in the private financial sector.

Drawing on evidence from behavioral economics, Sendhil Mullainathan and Eldar Shafir show that low-income individuals exhibit many of the same patterns and weaknesses in financial decision making as middle-class individuals and could benefit from many of the same financial aids. They argue that savings programs that automatically enroll participants and require them to actively opt out in order to leave the program could drastically increase savings ability. Ronald Mann demonstrates that significant changes in the credit market over the past fifteen years have allowed companies to expand credit to a larger share of low-income families. Mann calls for regulations on credit card companies that would require greater disclosure of actual interest rates and fees. Raphael Bostic and Kwan Lee find that while home ownership has risen dramatically over the past twenty years, elevated risks for low-income families—such as foreclosure—may well outweigh the benefits of owning a home.

The authors ultimately argue that if we want to demand financial responsibility from low-income households, we have an obligation to assure that these families have access to the banking, credit, and savings institutions that are readily available to higher-income families. Insufficient Funds highlights where and how access is blocked and shows how government policy and individual decisions could combine to eliminate many of these barriers in the future.

REBECCA M. BLANK is the Robert S. Kerr Senior Fellow at the Brookings Institution.

MICHAEL S. BARR is professor of law at the University of Michigan Law School.

CONTRIBUTORS: Raphael W. Bostic, Daryl Collins, Kwan Ok Lee, Ronald J. Mann, Jonathan Morduch, Sendhil Mullainathan, Una Okonkwo Osili, Anna L. Paulson, Daniel Schneider, John Karl Scholz, Ananth Seshadri, Eldar Shafir, Michael Sherraden, Peter Tufano.

A Volume in the National Poverty Center Series on Poverty and Public Policy