Trust in the Shadow of the Courts
AbstractIf contract enforcers must be randomly selected from the same population and thus are as opportunistic as ordinary traders could a system of adjudication nevertheless increase the degree to which contractual obligations on large anonymous markets are fulfilled? Adopting an indirect evolutionary approach with endogenous preference formation it can be shown that without superior behaviour of adjudicators an adjudication system can induce untrustworthy traders to behave as if trustworthy. However, in the presence of occasional mistakes adjudication will merely slow down but not fully eliminate the evolutionary advantage of untrustworthy types. Only if arbitrators become judges who receive a fixed income occasional mistakes will not favour untrustworthy types. But even then under non-optimal court politics and unfavourable parameter constellations in a low trust environment the introduction of courts may in fact contribute to the crowding out of the trustworthy.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 1997-89.
Date of creation: 1997
Date of revision:
Contact details of provider:
Web page: http://center.uvt.nl
Evolutionary game theory; intrinsic motivation; trust relationships; court system; legal litigation; Hobbesian problem of social order; crowding out;
Other versions of this item:
- Geoffrey Brennan & Werner Güth & Hartmut Kliemt, 2003. "Trust in the Shadow of the Courts," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 159(1), pages 16-, March.
- A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists
- A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
- K00 - Law and Economics - - General - - - General (including Data Sources and Description)
- K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Güth, Werner & Ockenfels, Axel, 1999.
"Evolutionary norm enforcement,"
SFB 373 Discussion Papers
1999,84, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
- Werner Gueth & Axel Ockenfels, 2000. "Evolutionary Norm Enforcement," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 156(2), pages 335-, June.
- Fali Huang, 2007.
"Building Social Trust: A Human Capital Approach,"
08-2007, Singapore Management University, School of Economics.
- Fali Huang, 2007. "Building Social Trust: A Human-Capital Approach," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 163(4), pages 552-573, December.
- Paul G. Mahoney, 1998. "Trust and Opportunism in Close Corporations," NBER Working Papers 6819, National Bureau of Economic Research, Inc.
- Werner Güth & Axel Ockenfels, .
"The Coevolution of Morality and Legal Institutions - An indirect evolutionary approach -,"
Papers on Strategic Interaction
2002-06, Max Planck Institute of Economics, Strategic Interaction Group.
- G Th, Werner & Ockenfels, Axel, 2005. "The coevolution of morality and legal institutions: an indirect evolutionary approach," Journal of Institutional Economics, Cambridge University Press, vol. 1(02), pages 155-174, December.
- Werner Güth & Hartmut Kliemt & Bezalel Peleg, 2000.
"Co-evolution of Preferences and Information in Simple Games of Trust,"
German Economic Review,
Verein für Socialpolitik, vol. 1(1), pages 83-110, 02.
- Güth, Werner & Kliemt, Hartmut & Peleg, Bezalel, 1998. "Co-evolution of preferences and information in simple games of trust," SFB 373 Discussion Papers 1998,72, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
- Kirchgässner, Gebhard, 2010. "On minimal morals," European Journal of Political Economy, Elsevier, vol. 26(3), pages 330-339, September.
- Güth, Werner, 1998. "Do banks crowd in or out business ethics? An indirect evolutionary analysis," SFB 373 Discussion Papers 1998,40, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Richard Broekman).
If references are entirely missing, you can add them using this form.