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| Author: | Bidner, C. Francois, P. |
| Title: | Cultivating trust: norms, institutions and the implications of scale |
| Journal: | Economic Journal
2011 : SEP, VOL. 121:555, p. 1097-1129 |
| Index terms: | empirical research gross national product mathematical models trust cross-sectional models equilibrium analysis regression analysis |
| Language: | eng |
| Abstract: | This article investigates the co-evolution of honesty norms and institutions. New trading opportunities require institutional changes, as the initial vulnerability of institutions to opportunistic behaviour leads to the deteriorating norms. We show that an escape from opportunism requires institutional improvements outpacing norm deterioration. A key prediction emerges: larger economies more likely evolve to steady states with strong honesty norms but need not improved institutions. This prediction is tested using a cross-section of countries; population is significantly positively related with trust, even after controlling for standard trust determinants and quality of institutions. |
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