We experimentally disentangle two potential sources for endogenous social interactions effects. By comparing groups where the group norm is publicly observable with those where it is not we can measure the size of any endogenous observation effect. By comparing connected with disconnected groups...

This article examines whether there are social influences on the decisions made by individuals about whether to trust others -- relative strangers -- in their respective societies. There are two possible types of social influences on the trust decision: first, contextual or exogenous social...

This paper examines the role of institutions in balance of payments adjustment. Economic outcomes are ultimately determined by the incentives, constraints and opportunities created for rational agents by formal or informal institutions. Of the formal institutions that influence adjustment, only...

People are shown to be “more (less) trusting as others are on average more (less) trusting” in a binary-choice-with-social-interactions model that is estimated using cross-section data from more than sixty countries, with mean trust as an explanatory variable. These endogenous effects...

Rational behaviour is required for markets to function efficiently; but myopic rational behaviour could work against pro-social choice, limit creativity, and minimise the extent of cooperative action. This tension is a serious drawback of the recent promotion of markets in developing countries...

This article establishes that there are significant social influences on the decisions made by individuals about whether to trust others. These social interactions effects may arise from exogenous-environmental characteristics or from endogenous effects that make people conform to the particular...

The Hirshleifer model of conflict is used to argue that without voluntary action to increase human security, the state may have extensive opportunities and incentives to increase the risk of conflict in the many poor countries where central governments provide local public goods. Metaphorically,...

Given that there are significant endogenous effects in trust that cause people to follow trust norms when deciding whether to trust others, trust can be modeled as a supermodular game or a game with strategic complementarities. As such, even though the strategy choices are binary and discrete,...

The idea that people follow trust norms when making trust decisions is developed in an evolutionary model of adaptive play by boundedly rational agents. Because it neither implies nor is it implied by cooperation, trust is not modelled as cooperation in a Prisoners' Dilemma but as a coordination...