Connected, but Qualified? Social Affiliations, Human Capital, and Service Professional Performance

While studies have argued for and found benefits from transacting with social affiliates, it remains unclear how and when they lead to inferior outcomes for professionals and consumers. Building on social and human capital theories, I argue that social affiliations in uncertain markets can lead to unanticipated downsides that reduce overall performance when human capital considerations are supplanted by an effort to avoid opportunism. I test my argument using a novel approach that pairs data from the Wasatch Front Regional Multiple Listing Service in Utah with hand-collected data on geographically assigned LDS (Mormon) congregation boundaries. This setting allows me to identify listings for which real estate agents and home sellers share a common church congregation affiliation, and to both independently and jointly explore the impact of social affiliations and human capital on transaction outcomes. I find that on average agents sell comparable homes for 2% more and 3.5 days quicker, as well as exert more...