Endogenous institutional selection, building trust, and economic growth

• 成果类型: Article
• 署名作者: Bodoh-Creed, Aaron L.
• 署名单位: University of California System; University of California Berkeley
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2019.01.005
• 发表日期: 2019
• 页码: 169-176
• 关键词: institutions; trust; Institutional selection

摘要

Private-order market institutions founded on trust-based relational contracts suffer adverse selection and moral hazard problems, while public-order market institutions have a limited capacity to enforce contracts. I model agent selection between contract enforcement institutions and demonstrate that the state's contract enforcement capacity is complementary to private-order contract enforcement institutions for low to moderate levels of public-order enforcement capacity. This suggests that initial improvements to public order institutions cause the accumulation of trust and result in economic growth in both institutions. However, I show that the private-order institution must collapse once the public-order contract enforcement capacity is too great. (C) 2019 Elsevier Inc. All rights reserved.