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To Trust or to Control: Informal Value Transfer Systems and Computational Analysis in Institutional Economics

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  • Claudius Gräbner
  • Wolfram Elsner
  • Alexander Lascaux

Abstract

This article illustrates the usefulness of computational methods for the investigation of institutions. As an example, we use a computational agent-based model to study the role of general trust and social control in informal value transfer systems (IVTS). We find that the terms of interaction between general trust and social control have an impact on how IVTS work, become stable, and prove highly effective. The case shows how computational models may help (i) to operationalize institutional theory and to clarify the functioning of institutions; (ii) to test the logical consistency of alternative hypotheses about institutions; and (iii) to relate institutionalist theory with other paradigms and to practice an interested pluralism.

Suggested Citation

  • Claudius Gräbner & Wolfram Elsner & Alexander Lascaux, 2018. "To Trust or to Control: Informal Value Transfer Systems and Computational Analysis in Institutional Economics," Journal of Economic Issues, Taylor & Francis Journals, vol. 52(2), pages 559-569, April.
    • Handle: RePEc:mes:jeciss:v:52:y:2018:i:2:p:559-569
    DOI: 10.1080/00213624.2018.1469936
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    References listed on IDEAS

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    1. Alexander Lascaux, 2015. "Crowding Out Trust in the Informal Monetary Relationships: The Curious Case of the Hawala System," Forum for Social Economics, Taylor & Francis Journals, vol. 44(1), pages 87-107, April.
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