This paper considers a community where contracting institutions are weak. If social sanctions against opportunism rise in times of stress, then some good projects may be born out of misfortune.

When ability complements effort, we would expect effort to increase with variables that proxy for ability. For example, we show that the hours worked by entrepreneurs should increase in experience, a proxy for ability. Yet, even if education is positively correlated with entrepreneurial ability,...

This paper considers a community where contracting institutions are weak. If social sanctions against opportunism rise in times of stress, then some good projects may be born out of misfortune.