Publication Type
Journal Article
Version
acceptedVersion
Publication Date
12-2007
Abstract
Much evidence suggests individuals differ in their predisposition to cooperate, which is essentially a component of human capital. This paper examines the role of individual cooperative tendencies and their interactions with institutions in generating social trust; it also endogenizes cooperative tendencies using a human-capital investment model. Multiple equilibria and inefficiencies exist due to positive externalities. An innovative finding is that, when institutions are more effective in punishing defecting behaviors, more people invest in cooperative tendencies and hence the endogenous social trust is higher, though the equilibrium cooperative tendencies are lower. This paper provides a plausible explanation for many empirical and experimental results.
Discipline
Labor Economics
Research Areas
Applied Microeconomics
Publication
Journal of Institutional and Theoretical Economics
Volume
163
Issue
4
First Page
552
Last Page
573
ISSN
1614-0559
Identifier
10.1628/093245607783242981
Publisher
Mohr Siebeck
Citation
HUANG, Fali.
Building Social Trust: A Human Capital Approach. (2007). Journal of Institutional and Theoretical Economics. 163, (4), 552-573.
Available at: https://ink.library.smu.edu.sg/soe_research/532
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1628/093245607783242981