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Law and Trust

Law and Trust

Huojun Sun
Copyright: © 2016 |Volume: 5 |Issue: 1 |Pages: 23
ISSN: 2160-9802|EISSN: 2160-9810|EISBN13: 9781466693548|DOI: 10.4018/ijabe.2016010101
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MLA

Sun, Huojun. "Law and Trust." IJABE vol.5, no.1 2016: pp.1-23. http://doi.org/10.4018/ijabe.2016010101

APA

Sun, H. (2016). Law and Trust. International Journal of Applied Behavioral Economics (IJABE), 5(1), 1-23. http://doi.org/10.4018/ijabe.2016010101

Chicago

Sun, Huojun. "Law and Trust," International Journal of Applied Behavioral Economics (IJABE) 5, no.1: 1-23. http://doi.org/10.4018/ijabe.2016010101

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Abstract

This survey addresses the question of whether strong legal enforcement crowds out or in the amount of trust in a society. The author reviews the empirical studies in the literature on macroeconomics, inter-firm cooperation and laboratory experiments, finding that mandatory legal rules, especially formal contracts, normally undermine trust except when they are perceived as legitimate, or there are no strong social norms of fairness (i.e. the population in a society is considerably heterogeneous), or the environment in which repeated commercial relationships take place becomes highly uncertain.

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