Generalized trust and wealth

Baç, Mehmet (2009) Generalized trust and wealth. International Review of Law and Economics, 29 (1). pp. 46-56. ISSN 0144-8188

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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
Uncontrolled Keywords: Trust; Incomplete information; Inequality; Wealth; Enforcement
Subjects: H Social Sciences > HB Economic Theory
K Law > K Law in general. Comparative and uniform law. Jurisprudence
Divisions: Faculty of Arts and Social Sciences
Depositing User: Mehmet Baç
Date Deposited: 08 Dec 2009 16:30
Last Modified: 25 May 2011 14:20

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