Trust and Culture

International Game Theory Review (IGTR), 2009

Posted: 10 Jun 2010

Date Written: June 1, 2009

Abstract

Large populations can gain from economies of scale but lose internal trust due to diluted information. This creates an optimal group size. However, trusting strangers who claim to be members invites outsiders to disguise as insiders and abuse extended trust. Thus, if cultural diversity can raise the imitation cost it can promote cooperation. Even so, however, scale economies are lost when the population subdivides and the cultural boundaries may have to be enforced to prevent assimilation. The model is consistent with norms against inter-cultural marriage and episodic boundary-reinforcing conflict where formal institutions for contract enforcement are weak.

Keywords: Culture, social capital, repeated prisoners' dilemma

JEL Classification: D82, D86, O17

Suggested Citation

Janus, Thorsten, Trust and Culture (June 1, 2009). International Game Theory Review (IGTR), 2009, Available at SSRN: https://ssrn.com/abstract=1622597

Thorsten Janus (Contact Author)

University of Wyoming ( email )

Box 3434 University Station
Laramie, WY 82070
United States

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