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Theft, Gift-Giving, and Trustworthiness: Honesty Is Its Own Reward in Rural Paraguay

Author

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  • Laura Schechter

Abstract

In developing countries lacking legal enforcement, villagers may use implicit contracts to minimize crime. I construct a dynamic limited-commitment model, in which a thief cannot commit to forego stealing, but is induced to steal less by the promise of future gifts. Combining survey data on production, theft, gifts, and trust with experiments measuring trustworthiness, I provide supporting evidence. Farmers living near more relatives or with plots that are difficult to steal from give fewer gifts and trust more, and those living near more relatives also experience less theft. Giving increases when trust is lower and the threat of theft is greater. (JEL D86, K42, O17, Z13)

Suggested Citation

  • Laura Schechter, 2007. "Theft, Gift-Giving, and Trustworthiness: Honesty Is Its Own Reward in Rural Paraguay," American Economic Review, American Economic Association, vol. 97(5), pages 1560-1582, December.
  • Handle: RePEc:aea:aecrev:v:97:y:2007:i:5:p:1560-1582
    Note: DOI: 10.1257/aer.97.5.1560
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    Citations

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    Cited by:

    1. Ligon, Ethan & Schechter, Laura, 2012. "Motives for sharing in social networks," Journal of Development Economics, Elsevier, vol. 99(1), pages 13-26.
    2. Steven D. Levitt & John A. List, 2009. "Can Field Experiments Return Agricultural Economics to the Glory Days?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(5), pages 1259-1265.
    3. Kimbrough, Erik & Sheremeta, Roman, 2014. "Why can’t we be friends? Entitlements and the costs of conflict," MPRA Paper 53253, University Library of Munich, Germany.
    4. Ravallion, Martin & Lokshin, Michael, 2010. "Who cares about relative deprivation?," Journal of Economic Behavior & Organization, Elsevier, vol. 73(2), pages 171-185, February.
    5. Shoji, Masahiro, 2016. "Incentive of risk sharing and trust formation: Experimental and survey evidence from Bangladesh," MPRA Paper 71950, University Library of Munich, Germany.
    6. Arina Nikandrova & Jevgenijs Steinbuks, 2017. "Contracting for the second best in dysfunctional electricity markets," Journal of Regulatory Economics, Springer, vol. 51(1), pages 41-71, February.
    7. Pierre Bachas & Paul Gertler & Sean Higgins & Enrique Seira, 2017. "How Debit Cards Enable the Poor to Save More," NBER Working Papers 23252, National Bureau of Economic Research, Inc.
    8. Frijters, Paul & Kong, Tao Sherry & Liu, Elaine M., 2015. "Who is coming to the artefactual field experiment? Participation bias among Chinese rural migrants," Journal of Economic Behavior & Organization, Elsevier, vol. 114(C), pages 62-74.
    9. Mitrut, Andreea & Nordblom, Katarina, 2007. "Motives for Private Gift Transfers: Theory and Evidence from Romania," Working Papers in Economics 262, University of Gothenburg, Department of Economics, revised 30 Apr 2008.
    10. Kathy Baylis & Yazhen Gong & Shun Wang, 2013. "Bridging vs. Bonding Social Capital and the Management of Common Pool Resources," NBER Working Papers 19195, National Bureau of Economic Research, Inc.
    11. Clinton J. Pecenka & Godfrey Kundhlande, 2014. "Theft, Gift-Giving, and Reciprocity: A South African Experiment," Journal of Development Studies, Taylor & Francis Journals, vol. 50(11), pages 1467-1481, November.
    12. repec:ebd:wpaper:165 is not listed on IDEAS
    13. Singh, Prakarsh, 2011. "Impact of terrorism on investment decisions of farmers: evidence from the Punjab insurgency," MPRA Paper 33328, University Library of Munich, Germany.
    14. Abigail Barr & Garance Genicot, 2008. "Risk Sharing, Commitment, and Information: An Experimental Analysis," Journal of the European Economic Association, MIT Press, vol. 6(6), pages 1151-1185, December.

    More about this item

    JEL classification:

    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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    1. Theft, Gift-Giving, and Trustworthiness: Honesty Is It's Own Reward in Rural Paraguay (AER 2007) in ReplicationWiki

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