What question did this study set out to answer?

To examine how disadvantageous social customs persist without eroding and to assess whether custom-driven wage setting can explain involuntary unemployment.

June 1, 1980The Quarterly Journal of Economics

A Theory of Social Custom, of Which Unemployment May be One Consequence

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Authors

GAGeorge A. AkerlofHitotsubashi University

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Implication

Theoretical modeling demonstrates persistence of disadvantageous social norms via reputation loss in economic markets, suggesting involuntary unemployment stems from fair wage customs.

Key Points

To examine how disadvantageous social customs persist without eroding and to assess whether custom-driven wage setting can explain involuntary unemployment.
Constructed a theoretical equilibrium model linking individual utility to social custom adherence and reputational sanctions.
Analyzed market-clearing mechanisms versus social conventions within labor market wage determination.
Demonstrated that formal models of social customs inherently produce multiple equilibria.
Showed that disadvantageous customs stably persist when the individual cost of disobedience includes significant loss of reputation.
Found that adherence to a fair wage convention rather than a market-clearing wage sustains involuntary unemployment.

Cite This Study

George A. Akerlof (1980) studied this question.

synapsesocial.com/papers/69f03734efcbcf5fe3ef77a3 https://doi.org/10.2307/1885667

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Implication

Theoretical modeling demonstrates persistence of disadvantageous social norms via reputation loss in economic markets, suggesting involuntary unemployment stems from fair wage customs.

A Theory of Social Custom, of Which Unemployment May be One Consequence

Discussion

Member takes

Implication

Key Points

Cite This Study

A Theory of Social Custom, of Which Unemployment May be One Consequence

Discussion

Member takes

Implication

Key Points

Cite This Study

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