Building Social Trust: A Human Capital Approach

Fali Huang ()

No 08-2007, Working Papers from Singapore Management University, School of Economics

Abstract: Much evidence suggests individuals differ 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 ineffciencies exist due to positive externalities. An innovative fi?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

JEL-codes: J24 Z13 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2007-09
New Economics Papers: this item is included in nep-exp, nep-hrm, nep-ltv, nep-sea and nep-soc
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Published in SMU Economics and Statistics Working Paper Series

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Related works:
Journal Article: Building Social Trust: A Human-Capital Approach (2007)
Working Paper: Building Social Trust: A Human Capital Approach (2007)
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