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Love Thy Neighbor: Bonding versus Bridging Trust

  • Poulsen, Odile

    ()

    (Department of Economics, Aarhus School of Business)

  • Svendsen, Gert Tinggaard

    ()

    (Aarhus University, Institut for Public Policy)

We study how trust is generated in society. In a two-sector model, we analyze two communities. In the bonding community people do not trust people outside their regular networks. In the bridging community people choose to trust strangers when they meet them. The hypothesis is that when trust is only bonding, it cannot accumulate. Our theoretical contribution is to show that when trust is only bonding then the economy’s level of trust moves to an unstable equilibrium that may under certain conditions ‡uctuate forever. If, however, trust is also bridging, then trust will accumulate. Future research should seek to establish the appropriate institutional framework for establishing the optimal mix between both bonding and bridging social capital in society.

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File URL: http://www.hha.dk/nat/wper/05-7_odpgts.pdf
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Paper provided by University of Aarhus, Aarhus School of Business, Department of Economics in its series Working Papers with number 05-7.

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Length: 28 pages
Date of creation: 02 Sep 2005
Date of revision:
Handle: RePEc:hhs:aareco:2005_007
Contact details of provider: Postal: The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark
Phone: +45 89 486396
Fax: +45 8615 5175
Web page: http://www.asb.dk/departments/nat.aspx

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  1. Anders Poulsen & Gert Svendsen, 2005. "Social Capital and Endogenous Preferences," Public Choice, Springer, vol. 123(1), pages 171-196, April.
  2. Greif, Avner, 1989. "Reputation and Coalitions in Medieval Trade: Evidence on the Maghribi Traders," The Journal of Economic History, Cambridge University Press, vol. 49(04), pages 857-882, December.
  3. Nishimura, Kazuo, 1985. "Competitive equilibrium cycles," Journal of Economic Theory, Elsevier, vol. 35(2), pages 284-306, August.
  4. Goenka, A. & Poulsen, O., 2002. "Indeterminacy and Labor Augmenting Externalities," Working Papers 02-9, University of Aarhus, Aarhus School of Business, Department of Economics.
  5. Nishimura, Kazuo & Yano, Makoto, 1994. "Social capital as a public good and an oscillatory behaviour," Ricerche Economiche, Elsevier, vol. 48(3), pages 185-193, September.
  6. Kurrild-Klitgaard, Peter & Svendsen, Gert Tinggaard, 2003. " Rational Bandits: Plunder, Public Goods, and the Vikings," Public Choice, Springer, vol. 117(3-4), pages 255-72, December.
  7. Drugeon, Jean-Pierre & Venditti, Alain, 2001. "Intersectoral external effects, multiplicities & indeterminacies," Journal of Economic Dynamics and Control, Elsevier, vol. 25(5), pages 765-787, May.
  8. Jean-Pierre Drugeon & Odile Poulsen & Alain Venditti, 2003. "On Intersectoral allocations, factors substitutability and multiple long-run growth paths," Economic Theory, Springer, vol. 21(1), pages 175-183, 01.
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