IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/49812.html
   My bibliography  Save this paper

Formal Institutions and the Trust Formation Process: A Psychological Approach to Explain the Relationship between Institutions and Interpersonal Trust

Author

Listed:
  • Tamilina, Larysa
  • Tamilina, Natalya

Abstract

While formal institutions are recognized as having an effect on trust formation, no theoretical or empirical models exist to formalize this relationship. This study introduces a new conceptual framework to explain trust building by individuals and the role that formal rules and laws may play in this process. Drawing on a social-cognitive theory of psychology, we present trust as composed of internal, interpersonal, and external components with the latter encompassing formal institutions. We further demonstrate that there are three mechanisms – sanction, legitimacy, and autonomy – through which formal institutions may affect trust levels either directly or indirectly. These propositions are tested empirically based on the European Social Survey data (2004) by using a variety of statistical techniques. Our empirical analysis demonstrates evidence of heterogeneity in institutional effects on trust, suggesting that the autonomy dimension of the institutional framework is particularly important for trust formation processes.

Suggested Citation

  • Tamilina, Larysa & Tamilina, Natalya, 2013. "Formal Institutions and the Trust Formation Process: A Psychological Approach to Explain the Relationship between Institutions and Interpersonal Trust," MPRA Paper 49812, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:49812
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/49812/1/MPRA_paper_49812.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Zak, Paul J & Knack, Stephen, 2001. "Trust and Growth," Economic Journal, Royal Economic Society, vol. 111(470), pages 295-321, April.
    2. Henry Farrell & Jack Knight, 2003. "Trust, Institutions, and Institutional Change: Industrial Districts and the Social Capital Hypothesis," Politics & Society, , vol. 31(4), pages 537-566, December.
    3. Oliver E. Williamson, 2000. "The New Institutional Economics: Taking Stock, Looking Ahead," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 595-613, September.
    4. Shao, Ruodan & Aquino, Karl & Freeman, Dan, 2008. "Beyond Moral Reasoning: A Review of Moral Identity Research and Its Implications for Business Ethics," Business Ethics Quarterly, Cambridge University Press, vol. 18(4), pages 513-540, October.
    5. Iris Bohnet & Yael Baytelman, 2007. "Institutions and Trust," Rationality and Society, , vol. 19(1), pages 99-135, February.
    6. Fidrmuc, Jan, 2003. "Economic reform, democracy and growth during post-communist transition," European Journal of Political Economy, Elsevier, vol. 19(3), pages 583-604, September.
    7. Jessica Henson Decker & Jamus Jerome Lim, 2008. "What fundamentally drives growth? Revisiting the institutions and economic performance debate," Journal of International Development, John Wiley & Sons, Ltd., vol. 20(5), pages 698-725.
    8. Persson, Torsten & Tabellini, Guido, 1994. "Is Inequality Harmful for Growth?," American Economic Review, American Economic Association, vol. 84(3), pages 600-621, June.
    9. Mr. Francis Fukuyama, 2000. "Social Capital and Civil Society," IMF Working Papers 2000/074, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tamilina, Larysa & Tamilina, Natalya, 2015. "Psychology of Trust: A Three Component Analytical Framework to Explain the Impact of Formal Institutions on Social Trust Formation," MPRA Paper 68647, University Library of Munich, Germany, revised 10 Feb 2015.
    2. Tamilina, Larysa & Tamilina, Natalya, 2017. "Explaining the Impact of Formal Institutions on Social Trust: A Psychological Approach," MPRA Paper 84560, University Library of Munich, Germany.
    3. Tamilina, Larysa & Tamilina, Natalya, 2014. "The impact of formal institutions on social trust formation: A social-cognitive approach," MPRA Paper 63203, University Library of Munich, Germany.
    4. Marco Ferroni & Mercedes Mateo Díaz & J. Mark Payne, 2007. "Development under Conditions of Inequality and Distrust: An Exploration of the Role of Social Capital and Social Cohesion in Latin America," IDB Publications (Working Papers) 53818, Inter-American Development Bank.
    5. Thomas Apolte, 2011. "Democracy and prosperity in two decades of transition," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 19(4), pages 693-722, October.
    6. Apolte, Thomas & Peters, Heiko, 2009. "Governance, Demokratie und wirtschaftliche Entwicklung in den ehemals sozialistischen Staaten," IÖB-Diskussionspapiere 1/09, University of Münster, Institute for Economic Education.
    7. Zak, Paul J. & Feng, Yi & Kugler, Jacek, 2002. "Immigration, fertility, and growth," Journal of Economic Dynamics and Control, Elsevier, vol. 26(4), pages 547-576, April.
    8. Ernst Fehr, 2009. "On The Economics and Biology of Trust," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 235-266, 04-05.
    9. John Nye & Gregory Androuschak & Desiree Desierto & Garett Jones & Maria Yudkevich, 2012. "What Determines Trust? Human Capital vs. Social Institutions: Evidence from Manila and Moscow," HSE Working papers WP BRP 18/EC/2012, National Research University Higher School of Economics.
    10. D’Hernoncourt, Johanna & Méon, Pierre-Guillaume, 2012. "The not so dark side of trust: Does trust increase the size of the shadow economy?," Journal of Economic Behavior & Organization, Elsevier, vol. 81(1), pages 97-121.
    11. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2010. "Civic Capital as the Missing Link," NBER Working Papers 15845, National Bureau of Economic Research, Inc.
    12. Fiorillo, Damiano, 2005. "Capitale Sociale Civile: una nota sui concetti e sulla evidenza empirica macro [Civil Social Capital: a note on the concepts and on the macro empirical evidence]," MPRA Paper 3822, University Library of Munich, Germany.
    13. Jonathan A. Schwabish, 2008. "The Effects of Earnings Inequality on State Social Spending in the United States," Public Finance Review, , vol. 36(5), pages 588-613, September.
    14. Lisa R. Anderson & Jennifer M. Mellor & Jeffrey Milyo, 2003. "Inequality, Group Cohesion, and Public Good Provision: An Experimental Analysis," Working Papers 0308, Harris School of Public Policy Studies, University of Chicago.
    15. Paul J. Zak, 2002. "Genetics, family structure, and economic growth," Journal of Evolutionary Economics, Springer, vol. 12(3), pages 343-365.
    16. Alvin Etang, 2008. "Modelling the Effects of Socio-Economic Characteristics on Survey Trust: Empirical Evidence from Cameroon," Working Papers 0808, University of Otago, Department of Economics, revised Oct 2008.
    17. Gradstein, Mark, 2005. "Democracy, Property Rights, Redistribution and Economic Growth," CEPR Discussion Papers 5130, C.E.P.R. Discussion Papers.
    18. Gustavsson, Magnus & Jordahl, Henrik, 2008. "Inequality and trust in Sweden: Some inequalities are more harmful than others," Journal of Public Economics, Elsevier, vol. 92(1-2), pages 348-365, February.
    19. Greiner, Ben & Ockenfels, Axel & Werner, Peter, 2012. "The dynamic interplay of inequality and trust—An experimental study," Journal of Economic Behavior & Organization, Elsevier, vol. 81(2), pages 355-365.
    20. Luigi Guiso & Paolo Pinotti, 2012. "Democratization and Civic Capital," EIEF Working Papers Series 1202, Einaudi Institute for Economics and Finance (EIEF), revised Feb 2012.

    More about this item

    Keywords

    interpersonal trust; formal institutions; social-cognitive psychology; heterogeneity; trust formation process;
    All these keywords.

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • Z10 - Other Special Topics - - Cultural Economics - - - General
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:49812. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.