The Incentive Complementarity Between Formal and Informal Enforcement

• 成果类型: Article
• 署名作者: Jackson, Matthew O.; Xing, Yiqing
• 署名单位: Stanford University; The Santa Fe Institute; Peking University
• 刊物名称: JOURNAL OF THE EUROPEAN ECONOMIC ASSOCIATION
• ISSN/ISSBN: 1542-4766
• DOI: 10.1093/jeea/jvae009
• 发表日期: 2024
• 页码: 2294-2328
• 关键词: social norms; institutions; religion; COOPERATION; governance; emergence; trust; TRADE; ORDER; LAW

摘要

We introduce a model in which people exchange some goods and services informally in their community and others formally on a market. We show that enforcement by informal communities and a formal market are complements: If communities ostracize individuals who are caught cheating on the market, this bolsters incentives to comply with exchanges in both settings. Although transactions within a community generate lower gains from trade than those on the wider market, the enhanced incentives from simultaneously transacting in communities and on the overall market can be welfare-enhancing compared with either extreme. We discuss the implications of informal community exchanges in a country's development as well as how moral or religious beliefs enhance the complementarity between community and formal enforcement.