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Generalized Trust and Sustainable Coexistence between Socially Responsible Firms and Non Profit Organizations

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  • Angelo Antoci

    () (University of Sassari)

  • Marcello Galeotti

    () (University o Firenze)

  • Paolo Russu

    () (University of Sassari)

  • Zarri

    () (Department of Economics (University of Verona))

Abstract

In this paper, we focus on a specific component of economically rel- evant trust, i.e. on what we call `institutionally produced generalized trust', defined as the amount of widespread trust (which is a public good for the economic system as a whole) endogenously and continuously gen- erated by the interaction of two types of private organizations operating in the economy: for-profit firms and nonprofit organizations. Through an evolutionary model with a trust accumulation equation and two replicator equations (capturing the evolution of economic organizations over time) we show that (1) The fixed point where all the four sub-types of private organizations considered in the model are simultaneously present can be attractive only if `virtuous' for-profits (i.e. socially responsible firms) and `virtuous' nonprofits (i.e. actually trustworthy mission-oriented organiza- tions) generate a negative externality on the other organizations of the same type. (2) The fixed point where the level of trust is very low and no socially responsible firms neither trustworthy organizations are present can be attractive; this social configuration interestingly recalls, to some extent, what some prominent social scientists depict as a trend currently occurring in the United States. (3) A socio-economic scenario where four pure population fixed points are simultaneously attractive exists.

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Bibliographic Info

Paper provided by University of Verona, Department of Economics in its series Working Papers with number 22.

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Length: 36
Date of creation: Jul 2005
Date of revision:
Publication status: Published on Journal of Chaos, Solitons and Fractals, 29, 3, 2006, pp. 783-802.
Handle: RePEc:ver:wpaper:22

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Keywords: Generalized trust; socially responsible firms; nonprofit organizations; evolutionary games;

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References

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  1. Zak, Paul J & Knack, Stephen, 2001. "Trust and Growth," Economic Journal, Royal Economic Society, vol. 111(470), pages 295-321, April.
  2. Bjornerstedt, J. & Weibull, J.W., 1993. "Nash Equilibrium and Evolution by Imitation," DELTA Working Papers 93-23, DELTA (Ecole normale supérieure).
  3. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2004. "The Role of Social Capital in Financial Development," American Economic Review, American Economic Association, vol. 94(3), pages 526-556, June.
  4. Samuel Bowles & Herbert Gintis, 2001. "Social Capital and Community Governance," Working Papers 01-01-003, Santa Fe Institute.
  5. Leete, Laura, 2000. "Wage equity and employee motivation in nonprofit and for-profit organizations," Journal of Economic Behavior & Organization, Elsevier, vol. 43(4), pages 423-446, December.
  6. Jorgen W. Weibull, 1997. "Evolutionary Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262731215.
  7. Besley, Tim & Ghatak, Maitreesh, 2005. "Competition and incentives with motivated agents," Open Access publications from London School of Economics and Political Science http://eprints.lse.ac.uk/, London School of Economics and Political Science.
  8. Antoci, Angelo & Sacco, Pier Luigi & Vanin, Paolo, 2004. "Social capital accumulation and the evolution of social partecipation," AICCON Working Papers 5-2004, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
  9. Sacco, Pier Luigi & Vanin, Paolo & Zamagni, Stefano, 2006. "The Economics of Human Relationships," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
  10. Angelo Antoci & Pier Sacco & Luca Zarri, 2004. "Coexistence of Strategies and Culturally-Specific Common Knowledge: An Evolutionary Analysis," Journal of Bioeconomics, Springer, vol. 6(2), pages 165-194, May.
  11. Antoci, Angelo & Sacco, Pier Luigi & Zarri, Luca, 2004. "Endogenous Preferences and Private Provision of Public Goods: a Double Critical Mass Model," AICCON Working Papers 2-2004, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
  12. Becchetti, Leonardo & Federico, Giorgio & Solferino, Nazaria, 2005. "The game of social responsibility: pioneers, imitators and social welfare," AICCON Working Papers 15-2005, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
  13. Knack, Stephen & Keefer, Philip, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1251-88, November.
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