The theory of informal transactions in bureaucracies: some qualifications

The ambition of the paper is certainly not to change substantially Breton and Wintrobe‘s story. We can be sure that many of the different pieces that they have forged and assembled in their book v ill be replaced or modified in the course of time. This is the fate of all interesting theories. But only time-consuming and collective efforts can achieve this. The only ambition of this paper is a small beginning in that direction. Section II of the paper compares some of the mechanisms, others than trust, vhich have been proposed to explain self-enforcing exchanges. Then, Breton 8nd Wint robe's modelling of trust and trust accumulation is looked at critically in Section III. Section IV presents an alternative mechanism, inspired by the Popperian philosophy of the grovth of knovledge. Up to that point, we are concerned only vith the foundations part of the story. However, in Section Y, partly as an application of ideas presented in the previous sections and partly on the basis of some other ideas introduced at that stage, I analyze a particular kind of network, the 'transbureau" network, based on horizontal trust. Since transbureau networks are compatible with vertical trust, and moreover are efficient whenever there is enough of this vertical trust, an important prediction derived by Breton and Wi ntrobe is qualified.