Transaction costs are a major reason why international trade flows are much smaller than traditional trade theory would suggest. Trust between trading partners lowers transaction costs and may therefore enhance trade. The empirical analysis of this paper shows that more trust leads to more trade...

This paper provides empirical evidence that campaign contributions arestrongly associated with market expectations of future firm-specific political favors,including preferential access to external financing. Using a novel dataset, we find thatfirms in Brazil providing contributions in the 1998...

This paper provides an economic foundation for non-binding mediation to stimulate first collective bargaining agreements, as implemented in British Columbia since 1993. We show that the outcome of first-contract mediation is Pareto efficient and proves immune to the insider-outsider problem of...

This paper studies markets plagued with asymmetric information on the quality of traded goods. In Akerlof's setting, sellers are better informed than buyers. In contrast, we examine cases where buyers are better informed than sellers. This creates an inverse adverse selection problem: The market...

Theory predicts that default breach remedies are immaterial whenever contracting costs are negligible. Some experimental studies, however, suggest that in practice default rules do matter, as they may affect parties' preferences over contract terms. This paper presents results from an experiment...

The main goal of this study is two-fold: (1) to provide a general overview of thecontributions to the literature on the informal sector, with a special focus on the PublicChoice approach; and (2) to compare these contributions across two institutionallydifferent types of countries: developed and...

The obligation to pay bride wealth at marriage is usually associated with thecontinuation of the lineage or considered a compensation for the loss of laborfor the family that provides the bride. In this paper a different interpretationis advanced. The obligation to pay of bride wealth is seen as...

This discussion paper resulted in a publication in the <Journal of Economic Psychology</I> (2006). Volume 27, issue 3, pages 402-422.<P> A series of experiments in Albania and the Netherlands give us the opportunity to compare behavioral patterns related to tax evasion. Subjects have to decide between a random 'registered' income,...</p></journal>

Existing studies show a positive relationship between entrepreneurs' business performance and their conventional human capital as measured by previous business experience and formal education. In this paper, we explore whether illegal entrepreneurship experience (IEE), an unconventional form of...

Growth empirics with institutional measures is performed for 25 transition countries overthe period 1990-95. Estimation results suggest that (particularly state) institutions aresignificant for growth and, especially, foreign direct investment (FDI), the latter in turnbeing important for the...