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Institutional Quality, Culture, and Norms of Cooperation: Evidence from Behavioral Field Experiments

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  • Alessandra Cassar
  • Giovanna d'Adda
  • Pauline Grosjean

Abstract

We examine the causal effect of legal institutional quality on informal norms of cooperation and study the interaction of institutions and culture in sustaining economic exchange. A total of 346 subjects in Italy and Kosovo played a market game under different and randomly allocated institutional treatments, which generated different incentives to behave honestly, preceded and followed by a noncontractible and nonenforceable trust game. Significant increases in individual trust and trustworthiness followed exposure to better institutions. A 1-percentage-point reduction in the probability of facing a dishonest partner in the market game, which is induced by the quality of legal institutions, increases trust by 7-11 percent and trustworthiness by 13-19 percent. This suggests that moral norms of cooperative behavior can follow improvements in formal institutional quality. Cultural origin, initial trust, and trustworthiness influence opportunistic behavior in markets, but only in the absence of strong formal institutions.

Suggested Citation

  • Alessandra Cassar & Giovanna d'Adda & Pauline Grosjean, 2014. "Institutional Quality, Culture, and Norms of Cooperation: Evidence from Behavioral Field Experiments," Journal of Law and Economics, University of Chicago Press, vol. 57(3), pages 821-863.
  • Handle: RePEc:ucp:jlawec:doi:10.1086/678331
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Emeric Henry & Nicolas Jacquemet & Roberto Galbiati, 2017. "Spillovers, Persistence and Learning: Institutions and the Dynamics of Cooperation," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01613850, HAL.
    2. Galbiati, Roberto & Henry, Emeric & Jacquemet, Nicolas, 2017. "Spillovers, Persistence and Learning: Institutions and the Dynamics of Cooperation," CEPR Discussion Papers 12128, C.E.P.R. Discussion Papers.
    3. Ekaterina Borisova & Andrei Govorun & Denis Ivanov, 2016. "Bridging or Bonding? Preferences for Redistribution and Social Capital in Russia," Working Papers 05/2016, IMT Institute for Advanced Studies Lucca, revised Nov 2016.

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