Publication Type
Working Paper
Version
publishedVersion
Publication Date
9-2007
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
First Page
1
Last Page
23
Publisher
SMU Economics and Statistics Working Paper Series, No. 08-2007
City or Country
Singapore
Citation
HUANG, Fali.
Building Social Trust: A Human Capital Approach. (2007). 1-23.
Available at: https://ink.library.smu.edu.sg/soe_research/1127
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.
Comments
Published in Journal of Institutional and Theoretical Economics JITE, 2007, https://doi.org/10.1628/093245607783242981