Trust and Social Control. Sources of cooperation, performance, and stability in informal value transfer systems

Arbeitspapier

We study the functioning of informal value transfer systems (IVTS) with the example of Hawala. More precisely, we use computational experiments to study the roles of generalized trust and social control for the stability and efficiency of IVTS. Previous literature was ambiguous with regard to: (i) how trust and control should be operationalized formally, (ii) which, if any of the two, carries a larger relevance for the functioning of IVTS, (iii) whether (and when) they relate to each other as substitutes or complements, and (iv) how they interact with a number of other environmental conditions. Our experiments suggest answers to all these questions. We show that both trust and control are necessary, but not sufficient to guarantee the functioning of Hawala, and that other relevant conditions, such as population size, interaction density, and forgiveness of the agents, provide important contexts. Aside from clarifying these questions, we provide a theoretically grounded operationalization of generalized trust and social control that is applicable to informal exchange systems in general.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ICAE Working Paper Series ; No. 62

Classification and Topics

• Classification: Wirtschaft ; Computational Techniques; Simulation Modeling ; Institutions: Design, Formation, Operations, and Impact ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness ; Financial Institutions and Services: Other ; Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
• Subject: Hawala ; Computational experiment ; Informal Value Transfer Systems ; Institution ; Social Control ; Trust

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Gräbner, Claudius ; Elsner, Wolfram ; Lascaux, Alexander
• Event: Veröffentlichung
• (who): Johannes Kepler University Linz, Institute for Comprehensive Analysis of the Economy (ICAE)
• (where): Linz
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/171437
• Last update: 10.03.2025, 11:46 AM CET