Trust in State and Non-State Actors: Evidence from Dispute Resolution in Pakistan

Lack of trust in state institutions, often due to poor service provision, is a pervasive problem in many developing countries. It may also be one of the reasons citizens turn to non-state actors for services. This paper investigates whether information about improved public services can help build trust in state institutions and move people away from non-state actors. We focus on dispute resolution in rural Pakistan. We find that (truthful) information about reduced delays in state courts leads to citizens reporting higher likelihood of using them and to greater allocations to the state in two high-stakes lab-in-the-field games designed to measure belief in the effectiveness of state courts and willingness to contribute resources for others to access them. More interestingly, we find indirect negative effects on non-state actors in the same high-stakes settings. We show that the positive direct and negative indirect effects are both mediated by changes in beliefs about the effectiveness of these actors. Our preferred interpretation explains these behaviors as a response to improved beliefs about state actors which then motivate individuals to interact less with non-state actors and as a result downgrade their beliefs about them. We provide additional checks bolstering this interpretation and alleviating concerns about potential social experimenter effects or mechanical contrasts between the two actors. These results indicate that, despite distrust of the state in Pakistan, credible new information can change beliefs and behavior.