Karlan, Dean; Mobius, Markus; Rosenblat, Tanya; Szeidl, Adam - Department of Economics, Iowa State University - 2009
This paper builds a theory of trust based on informal contract enforcement in social networks. In our model, network connections between individuals can be used as social collateral to secure informal borrowing. We de…ne network-based trust as the highest amount one agent can borrow from...