An economist’s view of
cultural change
Raymond Fisman
Culture according to economists
• Tells us how to behave when we can’t turn
to a formal contract or set of rules for
guidance…part conscience, part
commitment, part coordination.
• On the conscience of an average
economist: “culture is just about trigger
strategies.”
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Culture as commitment
• We can’t write a perfect contract to
describe our obligations to an organization
• Informal agreements fill in the gaps
• Where does our knowledge of informal
agreements come from?
– The definition of “almost”
– Costly decisions and “almost going off the
rails”
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Culture as coordination
Kiss, bow, or…
The high cost of changing norms
Merging memo and meeting cultures
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Culture and communication in the lab
(Camerer and Weber)
• Subjects communicate via IM
• Paid based on rapidity with which one
subject (“manager”) can get another
subject (“employee”) to identify a sequence
of pictures
• Part II: After a number of rounds, new
employee is added, and manager must get
both employees to identify pictures
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Culture and communication in the lab
(Camerer and Weber)
Fig 2. Average completion times (11 merger sessions)
300
Completion time (seconds)
250
200
Acquired firm
150
Acquiring firm
100
50
0
“Uday Rao,”
“Cubeville,” “Lady with typewriter”
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“FlowersRound
in back,” “Macarena,” “Cupboard in back”
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Merging cultures in the lab – “harder than
we thought” (Camerer & Weber)
Fig 2. Average completion times (11 merger sessions)
• Subjects overestimate speed of merged
300
firm
250
Completion time (seconds)
– Average actual time: 86s
–200Average estimated time: 69s (p < 0.02)
Acquired firm
firm
• “New” and “old” subjects blame eachAcquiring
other
for100 failed communication
150
50
0
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Round
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Reforming a culture of corruption
Super-citizen Mockus
Economics of culture
Changing culture in Bogota
Economics of culture
Changing the culture of Bogota
• Public acts (rather than private
enforcement) helped to reinforce the
change in norms
• Participatory elements helped citizens
signal their own commitment to new norms
(and sanction those who didn’t)
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Economics, culture, and cultural change
• Organizational economists are taking a
more sophisticated, less under-socialized
view of culture
• Early work helps document the challenges
to changing/merging cultures: Hopefully
we’ll have more to say next time on what to
do about it
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