Do banks crowd in or out business ethics? An indirect evolutionary analysis
The evolution of trustworthiness as a major aspect of business ethics depends crucially on whether it can be signaled. If this is impossible, only opportunistic traders will survive. Whereas previous studies have analysed detection agencies (Güth and Kliemt, 1994 and 1998) or have substituted signaling by ex post-punishment, e.g. in the form of courts (Brennan, Güth, Kliemt, 1997a and b), we here introduce the institution of banks which can guarantee payment. It is shown that this can crowd in trustworthiness, i.e. trustworthy traders can survive in the evolutionary race. Compared to detection agencies the result may, however, be both, crowding out and crowding in of business ethics. The crucial feature is the bank's ability to discriminate between trustworthy and unreliable debtors which, in our model, is formally captured by the probability difference of accepting their respective credit applications.
Year of publication: |
1998
|
---|---|
Authors: | Güth, Werner |
Publisher: |
Berlin : Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes |
Saved in:
freely available
Series: | SFB 373 Discussion Paper ; 1998,40 |
---|---|
Type of publication: | Book / Working Paper |
Type of publication (narrower categories): | Working Paper |
Language: | English |
Other identifiers: | 721975054 [GVK] hdl:10419/61230 [Handle] RePEc:zbw:sfb373:199840 [RePEc] |
Source: |
Persistent link: https://www.econbiz.de/10010309842
Saved in favorites
Similar items by person
-
Public projects benefiting some and harming others: Three experimental studies
Güth, Werner, (2012)
-
Intentions and consequences: An experimental investigation of trust and reciprocity determinants
Güth, Werner, (2012)
-
Studying deception without deceiving participants: An experiment of deception experiments
Alberti, Federica, (2012)
- More ...