Cultivating Trust: Norms, Institutions and the Implications of Scale
AbstractWe study the co-evolution of norms and institutions in order to better understand the conditions under which potential gains from new trading opportunities are realized. New trading opportunities are particularly vulnerable to opportunistic behavior and therefore tend to provide fertile ground for cheating. Cheating discourages production, raising equilibrium prices and therefore the return to cheating, thereby encouraging further cheating. However, such conditions also provide institutional designers with relatively high incentives to improve institutions. We show how an escape from the shadow of opportunism requires that institutional improvements out-pace the deterioration of norms. A key prediction from the model emerges: larger economies are more likely to evolve to steady states with strong honesty norms. This prediction is tested using a cross section of countries; population size is found to have a significant positive relationship with a measure of trust, even when controlling for standard determinants of trust and institutional quality.
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 Vancouver School of Economics in its series Economics working papers with number patrick_francois-2009-66.
Length: 40 pages
Date of creation: 02 Dec 2009
Date of revision: 02 Dec 2009
Contact details of provider:
Web page: http://www.economics.ubc.ca/
Trust; Institutions; Population Size;
Other versions of this item:
- Chris Bidner & Patrick Francois, 2011. "Cultivating Trust: Norms, Institutions and the Implications of Scale," Economic Journal, Royal Economic Society, vol. 121(555), pages 1097-1129, 09.
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Alberto Bisin & Thierry Verdier, 2010. "The Economics of Cultural Transmission and Socialization," NBER Working Papers 16512, National Bureau of Economic Research, Inc.
- Yamamura, Eiji, 2013.
"Atomic bombs and the long-run effect on trust: Experiences in Hiroshima and Nagasaki,"
The Journal of Socio-Economics,
Elsevier, vol. 46(C), pages 17-24.
- Yamamura, Eiji, 2012. "Atomic bombs and the long-run effect on trust: Experiences in Hiroshima and Nagasaki," MPRA Paper 36805, University Library of Munich, Germany.
- Davide Ticchi & Thierry Verdier & Andrea Vindigni, 2013.
"Democracy, Dictatorship and the Cultural Transmission of Political Values,"
Carlo Alberto Notebooks
300, Collegio Carlo Alberto.
- Ticchi, Davide & Verdier, Thierry & Vindigni, Andrea, 2013. "Democracy, Dictatorship and the Cultural Transmission of Political Values," IZA Discussion Papers 7441, Institute for the Study of Labor (IZA).
- Ticchi, Davide & Verdier, Thierry & Vindigni, Andrea, 2013. "Democracy, Dictatorship and the Cultural Transmission of Political Values," POLIS Working Papers 171, Institute of Public Policy and Public Choice - POLIS.
- Christopher Bidner & Ken Jackson, 2011. "Trust and Vulnerability," Discussion Papers 2012-09, School of Economics, The University of New South Wales.
- Michi NISHIHARA & Takashi SHIBATA, 2013. "Preemption, leverage, and financing constraints," Discussion Papers in Economics and Business 13-05, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
- Algan, Yann & Cahuc, Pierre, 2013.
"Trust, Growth and Well-being: New Evidence and Policy Implications,"
IZA Discussion Papers
7464, Institute for the Study of Labor (IZA).
- Algan, Yann & Cahuc, Pierre, 2013. "Trust, Growth and Well-Being: New Evidence and Policy Implications," CEPR Discussion Papers 9548, C.E.P.R. Discussion Papers.
- Arbel, Yuval & Bar-El, Ronen & Siniver, Erez & Tobol, Yossi, 2014. "The Effect of Behavioral Codes and Gender on Honesty," IZA Discussion Papers 7946, Institute for the Study of Labor (IZA).
- Garofalo, Maria Rosaria, 2011.
"Il volontariato può sostenere lo sviluppo? Riflessioni metodologiche per la costruzione di un frame work teorico
[Can the voluntary sector sustain the development path of an economy? Suggestions f," MPRA Paper 40008, University Library of Munich, Germany.
- Rubinchik, Anna & Samaniego, Roberto M., .
"Demand For Contract Enforcement in A Barter Environment,"
WP2011/15, University of Haifa, Department of Economics, revised 06 Dec 2011.
- Anna Rubinchik & Roberto Samaniego, 2013. "Demand for contract enforcement in a barter environment," Social Choice and Welfare, Springer, vol. 41(1), pages 73-97, June.
- Shingo Ishiguro, 2011. "Relationships and Growth," Discussion Papers in Economics and Business 11-31-Rev, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP), revised May 2013.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Maureen Chin).
If references are entirely missing, you can add them using this form.