Love Thy Neighbor: Bonding versus Bridging Trust
AbstractWe study how trust is generated in society. In a two-sector model, we analyze two communities. In the bonding community people do not trust people outside their regular networks. In the bridging community people choose to trust strangers when they meet them. The hypothesis is that when trust is only bonding, it cannot accumulate. Our theoretical contribution is to show that when trust is only bonding then the economy’s level of trust moves to an unstable equilibrium that may under certain conditions ‡uctuate forever. If, however, trust is also bridging, then trust will accumulate. Future research should seek to establish the appropriate institutional framework for establishing the optimal mix between both bonding and bridging social capital in society.
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Bibliographic InfoPaper provided by University of Aarhus, Aarhus School of Business, Department of Economics in its series Working Papers with number 05-7.
Length: 28 pages
Date of creation: 02 Sep 2005
Date of revision:
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Postal: The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark
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Trust; two-sector model; chaos;
Find related papers by JEL classification:
- A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- D90 - Microeconomics - - Intertemporal Choice - - - General
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-09-11 (All new papers)
- NEP-EVO-2005-09-11 (Evolutionary Economics)
- NEP-SOC-2005-09-11 (Social Norms & Social Capital)
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