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No 2007:91:
Building Social Trust: A Human Capital Approach
Fali Huang
()
Additional contact information
Fali Huang: Singapore Management University, Postal: School of Economics, Singapore Management University, 90 Stamford Road, Singapore 178903, tel.: 65-68280859; fax: 65-68280833.
Abstract: 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.
Keywords: Cooperation; human capital; social trust
Language: English
24 pages, 2007
Note: Available online at: https://mercury.smu.edu.sg/rsrchpubupload/12518/trust2007-9-15.pdf
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