Generalized trust and wealth

Baç, Mehmet (2008) Generalized trust and wealth. (Accepted/In Press)

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The relation between economic inequality and trust is studied in a model where the ability to elicit trustworthiness from unrelated people depends on own wealth as well as the distribution and mean of population wealth. In equilibrium, the rich trust but betray while the poor do not trust but are trustworthy. Homogenizing wealth around its mean leads to a zero-trust outcome if mean wealth is sufficiently low, to full trust if mean wealth is large. More effective enforcement technologies increase, more effective counter-enforcement technologies decrease trust. Economic inequality reinforces itself through the trust and betray incentives it induces, suggesting a beneficial role for redistributive policies.

Item Type:Article
Subjects:H Social Sciences > HB Economic Theory
K Law > K Law in general. Comparative and uniform law. Jurisprudence
ID Code:9169
Deposited By:Mehmet Baç
Deposited On:19 Sep 2008 15:04
Last Modified:08 Dec 2009 16:30

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