Under weak contract enforcement the trading parties' trust, defined as their belief in other's trustworthiness, appears … important for realizing gains from trade. In contrast, under strong contract enforcement beliefs about other's trustworthiness … appear less important, suggesting that trust and contract enforcement are substitutes. Here we show, however, that trust and …

contract enforcement device. It turns out that reciprocity generates a significant increase in effort levels relative to the … prediction based on selfish preferences. Moreover, it gives rise to a considerable mitigation of the contract enforcement problem …