Individualism, Collectivism, and Trade
Aidin Hajikhameneh and
Discussion Papers from Department of Economics, Simon Fraser University
While economists recognize the important role of formal institutions in the promotion of trade, there is increasing agreement that institutions are typically endogenous to culture, making it difficult to disentangle their separate effects. Lab experiments that assign institutions exogenously and measure and control individual cultural tendencies can allow for clean identification of these effects. We focus on cultural tendencies toward individualism/collectivism, which social psychologists highlight as an important determinant of many behavioral differences across groups and people. We design an experiment to explore the relationship between subjects’ dispositions to individualism/collectivism and their willingness to engage in impersonal trade under enforcement institutions of varying strength. Overall, we find that individualists tend to engage in trade more often than collectivists. This effect is mitigated somewhat as the effectiveness of enforcement institutions increases. That is, the detrimental impact on future trade of having been cheated in the past is reduced. Nevertheless we see that cultural dispositions shape the decision to engage in impersonal trade, regardless of institutional environment.
Keywords: individualism; collectivism; exchange; trust; experiments (search for similar items in EconPapers)
JEL-codes: C7 C9 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-evo, nep-exp and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Journal Article: Individualism, collectivism, and trade (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:sfu:sfudps:dp17-01
Access Statistics for this paper
More papers in Discussion Papers from Department of Economics, Simon Fraser University Department of Economics, Simon Fraser University, 8888 University Drive, Burnaby, BC, V5A 1S6, Canada. Contact information at EDIRC.
Bibliographic data for series maintained by Working Paper Coordinator ().