Ethics, welfare, and capital markets

• 成果类型: Article
• 署名作者: Kanatas, George; Stefanadis, Christodoulos
• 署名单位: Rice University; University of Piraeus
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2014.04.001
• 发表日期: 2014
• 页码: 34-49
• 关键词: culture; Guilt; Pride; finance; CONTRACT; welfare

摘要

We examine implications of a society's cultural emphasis on moral sentiments. Entrepreneurs and investors interact in a game that entails both adverse selection and moral hazard; entrepreneurs may attempt to breach their contracts and expropriate investors. An agent is born into a particular culture but chooses whether to develop a moral conscience and thereby subject himself to moral sentiments. In equilibrium, societies that place less emphasis on guilt exhibit a lower risk of expropriation in contracts, a greater net price of capital, a larger size of firms, increased capital inflows and greater social welfare. The results of a greater emphasis on pride are in the same direction. (C) 2014 Elsevier Inc. All rights reserved.