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Property rights, trust, and economic performance

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  • Teraji, Shinji

Abstract

This article develops a model of how property rights can emerge in the absence of political institutions of enforcement. It analyzes an alternative security mechanism in the community. Individual agents commit themselves to protect property rights. Trust is a cognitive state that one will not be exploited by another. The model presents a behavioral economic framework, in which work effort varies. It is shown that trust is a crucial factor for producing high economic outcomes. The establishment of trust depends on shared mental models. Two equilibrium solutions can exist: one, with a full protection of property rights and a high level of trust, and another, with no protection of property rights and a low level of trust.

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  • Teraji, Shinji, 2008. "Property rights, trust, and economic performance," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(4), pages 1584-1596, August.
    • Handle: RePEc:eee:soceco:v:37:y:2008:i:4:p:1584-1596
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    References listed on IDEAS

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    Cited by:

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    2. Haddis Solomon & Yoko Kijima, 2022. "Does Land Certification Mitigate the Negative Impact of Weather Shocks? Evidence from Rural Ethiopia," Sustainability, MDPI, vol. 14(19), pages 1-17, October.
    3. Kelly, Liam D. & Deaton, B. James, 2020. "Endogenous Institutional Change on First Nations Reserves: Selecting into the First Nations Land Management Act," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304294, Agricultural and Applied Economics Association.
    4. Teraji, Shinji, 2009. "A model of corporate social performance: Social satisfaction and moral conduct," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(6), pages 926-934, December.
    5. Kee Hoon Chung & Hyeok Yong Kwon, 2021. "Trust and the protection of property rights: evidence from global regions," Public Choice, Springer, vol. 189(3), pages 493-513, December.
    6. Bezabih, Mintewab & Kohlin, Gunnar & Mannberg, Andrea, 2011. "Trust, tenure insecurity, and land certification in rural Ethiopia," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(6), pages 833-843.

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