Advanced Search
MyIDEAS: Login

Institutional Quality, Culture, and Norms of Cooperation: Evidence from a Behavioral Field Experiment

Contents:

Author Info

  • Alessandra Cassar

    (University of San Francisco)

  • Giovanna d'Adda

    (University opf Birmingham)

  • Pauline Grosjean

    ()
    (School of Economics, the University of New South Wales)

Abstract

We design an experiment to examine the causal effect of legal institutional quality on informal norms of cooperation, and study the interaction of institutions and culture in sustaining economic exchange. 346 subjects in Italy and Kosovo play a market game under different and randomly allocated institutional treatments, which generate different incentives to behave honestly, preceded and followed by a non-contractible and non-enforceable trust game. Significant increases in individual trust and trustworthiness follow exposure to ‘better’ institutions. A reduction by one percentage point in the probability of facing a dishonest partner in the market game, which is induced by the quality of legal institutions, increases trust by 7 to 11%, and trustworthiness by 13 to 19%. This suggests that moral norms of cooperative behavior can follow improvements in formal institutional quality. Cultural origin, initial trust and trustworthiness influence opportunistic behavior in markets, but only in the absence of strong formal institutions.

Download Info

If 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.
File URL: http://research.economics.unsw.edu.au/RePEc/papers/2013-10.pdf
Download Restriction: no

Bibliographic Info

Paper provided by School of Economics, The University of New South Wales in its series Discussion Papers with number 2013-10.

as in new window
Length: 74 pages
Date of creation: Oct 2013
Date of revision:
Handle: RePEc:swe:wpaper:2013-10

Contact details of provider:
Postal: Australian School of Business Building, Sydney 2052
Phone: (+61)-2-9385-3380
Fax: +61)-2- 9313- 6337
Email:
Web page: http://www.economics.unsw.edu.au/
More information through EDIRC

Related research

Keywords: legal institutions; culture; trust; trustworthiness; markets; experimental methods;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Marcel Fafchamps, 2006. "Development and social capital," Journal of Development Studies, Taylor & Francis Journals, vol. 42(7), pages 1180-1198.
  2. Head, Charles Keith & Mayer, Thierry, 2007. "Detection of Local Interactions from the Spatial Pattern of Names in France," CEPR Discussion Papers 6340, C.E.P.R. Discussion Papers.
  3. Ken Jackson, 2013. "Contract Enforceability and the Evolution of Social Capital," Journal of Law, Economics and Organization, Oxford University Press, vol. 29(1), pages 60-77, February.
  4. Guido Tabellini, 2010. "Culture and Institutions: Economic Development in the Regions of Europe," Journal of the European Economic Association, MIT Press, vol. 8(4), pages 677-716, 06.
  5. Becker, Sascha O. & Boeckh, Katrin & Hainz, Christa & Woessmann, Ludger, 2011. "The Empire Is Dead, Long Live the Empire! Long-Run Persistence of Trust and Corruption in the Bureaucracy," IZA Discussion Papers 5584, Institute for the Study of Labor (IZA).
  6. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2006. "Does Culture Affect Economic Outcomes?," Journal of Economic Perspectives, American Economic Association, vol. 20(2), pages 23-48, Spring.
  7. Maystre, Nicolas & Olivier, Jacques & Thoenig, Mathias & Verdier, Thierry, 2009. "Product-Based Cultural Change: Is the Village Global?," CEPR Discussion Papers 7438, C.E.P.R. Discussion Papers.
  8. Pedro Dal Bó & Andrew Foster & Louis Putterman, 2008. "Institutions and Behavior: Experimental Evidence on the Effects of Democracy," NBER Working Papers 13999, National Bureau of Economic Research, Inc.
  9. Pauline Grosjean, 2011. "The Weight of History on European Cultural Integration: A Gravity Approach," American Economic Review, American Economic Association, vol. 101(3), pages 504-08, May.
  10. Durante, Ruben, 2009. "Risk, Cooperation and the Economic Origins of Social Trust: an Empirical Investigation," MPRA Paper 25887, University Library of Munich, Germany.
  11. Marcel Fafchamps & Bart Minten, 2001. "Social Capital and Agricultural Trade," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(3), pages 680-685.
  12. Thomas Piketty, 1994. "Social Mobility and Redistributive Politics," Working papers 94-15, Massachusetts Institute of Technology (MIT), Department of Economics.
  13. Raymond Fisman & Edward Miguel, 2007. "Corruption, Norms, and Legal Enforcement: Evidence from Diplomatic Parking Tickets," Journal of Political Economy, University of Chicago Press, vol. 115(6), pages 1020-1048, December.
  14. Pauline Grosjean, 2011. "A History of Violence: The Culture of Honor as a Determinant of Homicide in the US South," Discussion Papers 2011-13, School of Economics, The University of New South Wales.
  15. Marcel Fafchamps, 2004. "Market Institutions in Sub-Saharan Africa: Theory and Evidence," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262062364, January.
  16. Fisman, Raymond & Khanna, Tarun, 1999. "Is trust a historical residue? Information flows and trust levels," Journal of Economic Behavior & Organization, Elsevier, vol. 38(1), pages 79-92, January.
  17. Alessandra Cassar & Pauline Grosjean & Sam Whitt, 2013. "Legacies of violence: trust and market development," Journal of Economic Growth, Springer, vol. 18(3), pages 285-318, September.
  18. Avner Greif, 2006. "History Lessons: The Birth of Impersonal Exchange: The Community Responsibility System and Impartial Justice," Journal of Economic Perspectives, American Economic Association, vol. 20(2), pages 221-236, Spring.
Full references (including those not matched with items on IDEAS)

Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Path dependence and cumulative causation in institutions and the people inhabiting them
    by Nicholas Gruen in Club Troppo on 2013-06-18 14:15:22
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Johannes C. Buggle, 2013. "Law and Social Capital: Evidence from the Code Napoleon in Germany," SOEPpapers on Multidisciplinary Panel Data Research 566, DIW Berlin, The German Socio-Economic Panel (SOEP).

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:swe:wpaper:2013-10. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gabriele Gratton).

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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