Trust, Introspection, and Market Participation: an Evolutionary Approach
We build a model where introspection matters - i.e., people rationally form expectations about others using the lens of their own attitudes. Since trustworthy individuals are more "optimistic" about people than opportunists, they are less afraid to engage in market-based exchanges, where they may be vulnerable to opportunistic behavior. Within this context, we use an indirect evolutionary approach to endogenize preferences for trustworthiness. In some cases, the material rewards from greater market participation may outweigh the material disadvantages from foregoing lucrative expropriation opportunities. This implies that trustworthiness may be evolutionary stable in the long-term. Although stricter enforcement (that limits the scope for opportunistic behavior) does in some cases favor preferences for trustworthy behavior (crowding in) we show that the opposite (crowding out) may also occur. Our findings are consistent with recent empirical evidence.
|Date of creation:||Jul 2009|
|Date of revision:|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Yildiz, Muhamet & Acemoglu, Daron & Chernozhukov, Victor, 2016.
"Fragility of asymptotic agreement under Bayesian learning,"
Econometric Society, vol. 11(1), January.
- Daron Acemoglu & Victor Chernozhukov & Muhamet Yildiz, 2009. "Fragility of Asymptotic Agreement under Bayesian Learning," Levine's Working Paper Archive 814577000000000139, David K. Levine.
- Steffen Huck & Joerg Oechssler, 1995.
"The Indirect Evolutionary Approach to Explaining Fair Allocations,"
Game Theory and Information
9507001, EconWPA, revised 27 Aug 1998.
- Huck, Steffen & Oechssler, Jorg, 1999. "The Indirect Evolutionary Approach to Explaining Fair Allocations," Games and Economic Behavior, Elsevier, vol. 28(1), pages 13-24, July.
- S. Huck & J. Oechssler, 1996. "The Indirect Evolutionary Approach To Explaining Fair Allocations," SFB 373 Discussion Papers 1996,13, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
- Paola Sapienza & Anna Toldra & Luigi Zingales, 2007.
NBER Working Papers
13387, National Bureau of Economic Research, Inc.
- Bester, Helmut & Guth, Werner, 1998.
"Is altruism evolutionarily stable?,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 34(2), pages 193-209, February.
- Guido Tabellini, 2008.
"The Scope of Cooperation: Values and Incentives,"
CESifo Working Paper Series
2236, CESifo Group Munich.
- Guido Tabellini, 2007. "The Scope of Cooperation: values and incentives," Working Papers 328, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Tabellini, Guido, 2007. "The Scope of Cooperation: Values and incentives," CEPR Discussion Papers 6534, C.E.P.R. Discussion Papers.
- Jeffrey Butler & Paola Giuliano & Luigi Guiso, 2010.
"The Right Amount of Trust,"
2010.61, Fondazione Eni Enrico Mattei.
- Jeffrey Butler & Paola Giuliano & Luigi Guiso, 2009. "The Right Amount of Trust," Economics Working Papers ECO2009/33, European University Institute.
- Butler, Jeff & Giuliano, Paola & Guiso, Luigi, 2009. "The Right Amount of Trust," CEPR Discussion Papers 7461, C.E.P.R. Discussion Papers.
- Jeffrey Butler & Paola Giuliano & Luigi Guiso, 2009. "The Right Amount of Trust," EIEF Working Papers Series 0908, Einaudi Institute for Economics and Finance (EIEF), revised Sep 2009.
- Jeffrey Butler & Paola Giuliano & Luigi Guiso, 2009. "The Right Amount of Trust," NBER Working Papers 15344, National Bureau of Economic Research, Inc.
- Butler, Jeffrey V. & Giuliano, Paola & Guiso, Luigi, 2009. "The Right Amount of Trust," IZA Discussion Papers 4416, Institute for the Study of Labor (IZA).
- Adriani, Fabrizio & Sonderegger, Silvia, 2009.
"Why do parents socialize their children to behave pro-socially? An information-based theory,"
Journal of Public Economics,
Elsevier, vol. 93(11-12), pages 1119-1124, December.
- Adriani, Fabrizio & Sonderegger, Silvia, 2009. "Why do parents socialize their children to behave pro-socially? An information-based theory," MPRA Paper 16107, University Library of Munich, Germany.
- Arthur J. Robson, 2001. "Why Would Nature Give Individuals Utility Functions?," Journal of Political Economy, University of Chicago Press, vol. 109(4), pages 900-929, August.
- De Long, J. Bradford & Shleifer, Andrei & Summers, Lawrence H. & Waldmann, Robert J., 1990.
"Noise Trader Risk in Financial Markets,"
3725552, Harvard University Department of Economics.
- Francois, Patrick, 2008. "Norms and Institution Formation," CEPR Discussion Papers 6735, C.E.P.R. Discussion Papers.
- Edward L. Glaeser & David I. Laibson & José A. Scheinkman & Christine L. Soutter, 2000.
The Quarterly Journal of Economics,
Oxford University Press, vol. 115(3), pages 811-846.
- Tore Ellingsen & Magnus Johannesson, 2004. "Promises, Threats and Fairness," Economic Journal, Royal Economic Society, vol. 114(495), pages 397-420, 04.
- Kurz, Mordecai, 1994. "On the Structure and Diversity of Rational Beliefs," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 4(6), pages 877-900, October.
- Swinkels, Jeroen M. & Samuelson, Larry, 2006.
"Information, evolution and utility,"
Econometric Society, vol. 1(1), pages 119-142, March.
- Robson, A.J., 1989. "Efficiency In Evolutionary Games: Darwin, Nash And Secret Handshake," Papers 89-22, Michigan - Center for Research on Economic & Social Theory.
- Iris Bohnet & Bruno S. Frey & Steffen Huck, . "More Order with Less Law: On Contract Enforcement, Trust, and Crowding," IEW - Working Papers 052, Institute for Empirical Research in Economics - University of Zurich.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:16110. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.