Institutional Quality, Culture, and Norms of Cooperation: Evidence from a Behavioral Field Experiment

Alessandra Cassar, Giovanna d'Adda and Pauline Grosjean

No 2013-10, Discussion Papers from School of Economics, The University of New South Wales

Abstract: We design an experiment to examine the causal effect of legal institutional quality on informal norms of cooperation, and study the interaction of institutions and culture in sustaining economic exchange. 346 subjects in Italy and Kosovo play a market game under different and randomly allocated institutional treatments, which generate different incentives to behave honestly, preceded and followed by a non-contractible and non-enforceable trust game. Significant increases in individual trust and trustworthiness follow exposure to ‘better’ institutions. A reduction by one percentage point in the probability of facing a dishonest partner in the market game, which is induced by the quality of legal institutions, increases trust by 7 to 11%, and trustworthiness by 13 to 19%. This suggests that moral norms of cooperative behavior can follow improvements in formal institutional quality. Cultural origin, initial trust and trustworthiness influence opportunistic behavior in markets, but only in the absence of strong formal institutions.

Keywords: legal institutions; culture; trust; trustworthiness; markets; experimental methods (search for similar items in EconPapers)
JEL-codes: K40 O17 Z10 (search for similar items in EconPapers)
Pages: 74 pages
Date: 2013-10
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-exp, nep-law and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://research.economics.unsw.edu.au/RePEc/papers/2013-10.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 503 Service Unavailable: Back-end server is at capacity

Related works:
Journal Article: Institutional Quality, Culture, and Norms of Cooperation: Evidence from Behavioral Field Experiments (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:swe:wpaper:2013-10

Access Statistics for this paper

More papers in Discussion Papers from School of Economics, The University of New South Wales Contact information at EDIRC.
Bibliographic data for series maintained by Hongyi Li ().