To friends everything, to strangers the law? An experiment on contract enforcement and group identity

Arbeitspapier

Although the role of formal and informal institutions in promoting economic growth and sustaining exchange relations is now well established, explaining and differentiating how informal and formal rules affect individual behavior remain a challenge. This study aims to distill the essential characteristics of formal and informal institutions and disentangle their effects on trust and performance in exchange relations through a laboratory experiment. Formal institutions are modeled as third-party contract enforcement while informal institutions are represented as shared group identity. Results show that trust choices increase as contract enforcement increases but are not affected by shared group identity. However, performance is more likely to occur in interactions with in-group members than out-group members.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Jena Economic Research Papers ; No. 2015-015

Classification and Topics

• Classification: Wirtschaft ; Noncooperative Games ; Design of Experiments: Laboratory, Individual ; Criteria for Decision-Making under Risk and Uncertainty
• Subject: contract enforcement ; exchange relations ; group identity ; institutions ; laboratory experiments

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Panganiban, Marian
• Event: Veröffentlichung
• (who): Friedrich Schiller University Jena
• (where): Jena
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/126527
• Last update: 10.03.2025, 11:44 AM CET