This dissertation provides empirical evidence on how economic incentives and religious identities can shape social cooperation. It consists of three essays. The first essay (Chapter 2) uses a laboratory experiment to examine how economic motives shape the strategic formation of social networks in a six-player linking game where link creation requires mutual consent. The experiment provides empirical evidence on the extent to which the strategic network formation theory proposed by Jackson and Watts (2002) is able to predict the final network from this linking process and the validity of its underlying behavioral assumptions.

Meanwhile, the second and third essays (in Chapters 3 and 4) use observational data to evaluate the role of religious identities in social cooperation. Chapter 3 utilizes the Indonesia Family Life Survey (IFLS) data to investigate how individual-level variations in religious denominations and religiosity are linked to particularized and generalized trust, and inter-group discrimination and tolerance in contemporary Indonesia. I find that religiosity is positively associated with particularized trust and in-group preference, and negatively with religious tolerance. These findings are consistent with the notion that religion may facilitate “parochial altruism”, which is altruism toward members of one's own group combined with hostility toward members of the out-groups. In Indonesia, this link is strongest for Muslims.

Chapter 4 extends the analysis to the community level and examines the influence of social interactions among people with different religious identities on cooperative attitudes. Using a dataset that combines the IFLS data with the 2000 Indonesian National Census microdata, the 2000 Poverty Map and the 2005 Village Potential statistics (or Podes), it examines how the religious diversity and segregation in the communities where people reside are linked to their cooperative attitudes. I find that people tend to be more cooperative and trusting in more religiously homogeneous communities, but exhibit a stronger in-group trust and are less tolerant of members of the religious out-groups. On the other hand, segregation matters for some outcomes — and when it does, its effects tend to be opposite those of diversity. Overall, the evidence suggests that social interactions may have had a role in amplifying and ameliorating the parochial effects of religion.