More Order with Less Law: On Contract Enforcement, Trust and Crowding

Bohnet, Iris; Frey, Bruno S.; Huck, Steffen

doi:10.2139/ssrn.236476

Cited by 242 publications

(204 citation statements)

References 50 publications

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“…Nice players chose cooperation 69% of the time when they were paired with other nice players and 39% of the time when they were paired with stingy players. Bohnet, Frey, and Huck (1999) directly test an indirect evolution model when they examine whether levels of third-party enforcement "crowd out" or "crowd in" the norm of being trustworthy (see Frey, 1994Frey, , 1997Frey and Oberholzer-Gee, 1997). They embed a basic game of trust in a regulatory regime where a litigation process is initiated if there is a breach of performance.…”

Section: Evidence Consistent With Indirect Evolutionary Processesmentioning

confidence: 99%

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Collective action and the evolution of social norms

Остром

2014

Journal of Natural Resources Policy Research

990

1,206

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Section: Evidence Consistent With Indirect Evolutionary Processesmentioning

confidence: 99%

“…Drawing on a stochastic model of individual preference adaptation, Bonnet, Frey, and Huck (1999) predict that norm-using behavior will be crowded out when m -types earn more than m-types. They design an experiment with three enforcement regimes.…”

mentioning

confidence: 99%

Collective action and the evolution of social norms

Остром

2014

Journal of Natural Resources Policy Research

990

1,206

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“…The literature on gift exchange games (Fehr, Kirchsteiger, and Riedl 1993;Brandts and Charness 2004;Charness 2004;Charness, Frechette, and Kagel 2004) and the more recent papers on the counterproductive effects of sanctions and other measures that constrain agents' shirking (Bohnet, Frey, and Huck 2001;Fehr and Falk 2002;Fehr and List 2004;Falk and Kosfeld 2006) suggest that beliefs about others' trustworthiness may be self-reinforcing. Principals in gift exchange games who trust more in terms of paying higher up-front wages induce a higher effort level on average.…”

Section: Possible Mechanisms Behind a Causal Role Of Trustmentioning

confidence: 99%

On The Economics and Biology of Trust

Fehr

2009

Journal of the European Economic Association

567

355

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In recent years, many social scientists have claimed that trust plays an important role in economic and social transactions. Despite its proposed importance, the measurement and the definition of trust seem to be not fully settled, and the identification of the exact role of trust in economic interactions has proven to be elusive. It is still not clear whether trust is just an epiphenomenon of good institutions or whether it plays an independent causal role capable of shaping important aggregate economic outcomes. In this paper, I rely on a behavioral definition of trust that enables us to relate it to economic primitives such as preferences and beliefs. I review strong biological and behavioral evidence indicating that trusting is not just a special case of risk-taking, but based on important forms of social preferences such as betrayal aversion. Behaviorally defined trust also opens the door for understanding national and ethnic trust differences in terms of differences in preferences and beliefs, and it suggests ways to examine and interpret a causal role of trust. ON THE ECONOMICS AND BIOLOGY OF TRUST Ernst Fehr University of Zurich AbstractIn recent years, many social scientists have claimed that trust plays an important role in economic and social transactions. Despite its proposed importance, the measurement and the definition of trust seem to be not fully settled, and the identification of the exact role of trust in economic interactions has proven to be elusive. It is still not clear whether trust is just an epiphenomenon of good institutions or whether it plays an independent causal role capable of shaping important aggregate economic outcomes. In this paper, I rely on a behavioral definition of trust that enables us to relate it to economic primitives such as preferences and beliefs. I review strong biological and behavioral evidence indicating that trusting is not just a special case of risk-taking, but based on important forms of social preferences such as betrayal aversion. Behaviorally defined trust also opens the door for understanding national and ethnic trust differences in terms of differences in preferences and beliefs, and it suggests ways to examine and interpret a causal role of trust. (JEL: A13, C90, D10, O10)

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“…With full information, sellers can build much stronger reputations vis-à-vis all potential customers. However, somewhat 1 Similar games have previously been used to investigate issues of trust by GÜTH, OCKENFELS, and WENDEL (1997), BOHNET, FREY and HUCK (2001), ANDERHUB, ENGELMANN, and GÜTH (2002), BOLTON, KATOK, and OCKENFELS (2004), BOHNET and HUCK (2004), and BOHNET, HARMGART, HUCK, and TYRAN (2005). The binary structure of the game lends itself to a much simpler interpretation than the continuous "investment game" popularized by BERG, DICKHAUT, and MCCABE (1995).…”

Section: Introductionmentioning

confidence: 99%

Competition fosters trust

Huck

Lünser

Tyran

2012

Games and Economic Behavior

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We study the effects of reputation and competition in a stylized market for experience goods. If interaction is anonymous, such markets perform poorly: sellers are not trustworthy, and buyers do not trust sellers. If sellers are identifiable and can, hence, build a reputation, efficiency quadruples but is still at only a third of the first best. Adding more information by granting buyers access to all sellers' complete history has, somewhat surprisingly, no effect. On the other hand, we find that competition, coupled with some minimal information, eliminates the trust problem almost completely.

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More Order with Less Law: On Contract Enforcement, Trust and Crowding

Cited by 242 publications

References 50 publications

Collective action and the evolution of social norms

Collective action and the evolution of social norms

On The Economics and Biology of Trust

Competition fosters trust

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