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Law and Trust

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  • Huojun Sun

    (University of Bologna, Bologna, Italy)

Abstract

This survey addresses the question of whether strong legal enforcement crowds out or in the amount of trust in a society. The author reviews the empirical studies in the literature on macroeconomics, inter-firm cooperation and laboratory experiments, finding that mandatory legal rules, especially formal contracts, normally undermine trust except when they are perceived as legitimate, or there are no strong social norms of fairness (i.e. the population in a society is considerably heterogeneous), or the environment in which repeated commercial relationships take place becomes highly uncertain.

Suggested Citation

  • Huojun Sun, 2016. "Law and Trust," International Journal of Applied Behavioral Economics (IJABE), IGI Global, vol. 5(1), pages 1-23, January.
    • Handle: RePEc:igg:jabe00:v:5:y:2016:i:1:p:1-23
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    File URL: http://services.igi-global.com/resolvedoi/resolve.aspx?doi=10.4018/ijabe.2016010101
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    Cited by:

    1. Zhihui Chai & Mingjun Tian & Fengtong Yao, 2023. "The Impact of Internet Use on Production Efficiency of Animal Husbandry: Based on the Evidence of 340 Herdsmen in Inner Mongolia, China," Sustainability, MDPI, vol. 15(10), pages 1-22, May.

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