Building Social Trust: A Human Capital Approach
Much evidence suggests individuals di¤er 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 ten...
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| Format: | text |
| Language: | English |
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Institutional Knowledge at Singapore Management University
2007
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| Online Access: | https://ink.library.smu.edu.sg/soe_research/1028 https://ink.library.smu.edu.sg/context/soe_research/article/2027/viewcontent/trust2007_9_15.pdf |
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| Institution: | Singapore Management University |
| Language: | English |
| Summary: | Much evidence suggests individuals di¤er 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 ine¢ ciencies exist due to positive externalities. An innovative …nding is that, when institutions are more e¤ective 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 |
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