TRUST AND CULTURE

Thorsten Janus

International Game Theory Review (IGTR), 2009, vol. 11, issue 02, 199-206

Abstract: Large populations can gain from economies of scale but lose internal trust due to diluted information. This creates an optimal group size. However, trusting strangers who claim to be members invites outsiders to disguise as insiders and abuse extended trust. Thus, if cultural diversity can raise the imitation cost it can promote cooperation. Even so, however, scale economies are lost when the population subdivides and the cultural boundaries may have to be enforced to prevent assimilation. The model is consistent with norms against inter-cultural marriage and episodic boundary-reinforcing conflict where formal institutions for contract enforcement are weak.

Keywords: Culture; social capital; repeated prisoners' dilemma; JEL Classification: D82; JEL Classification: D86; JEL Classification: O17 (search for similar items in EconPapers)
JEL-codes: B4 C0 C6 C7 D5 D7 M2 (search for similar items in EconPapers)
Date: 2009
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DOI: 10.1142/S021919890900225X

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