Lecture 9 Flashcards
1
Q
Economic function of trust
A
Reducing the transaction costs and the need for monitoring
2
Q
Costs ex ante: in connection with selection and information gathering
A
- Search costs (associated with the identification of potential trading partners)
- Contracting costs (associated with negotiating and writing an agreement)
3
Q
Costs ex post: in connection with measurement and enforcement
A
- Monitoring costs (associated with monitoring the execution of the agreement and ensuring each party lives up to the promises specified in the agreement)
- Enforcement costs (associated with ex post bargaining and sanctioning parties that do not live up to the agreement)
4
Q
3 empirical measures of trust
A
- Surveys
- Experimental games in the lab
- Experimental games in the field (paired with surveys)
5
Q
Surveyquestions to measure trust
A
- Generalized trust question
- Fair question
- Help question
6
Q
3 dynamics of trust
A
- Climate
- History
- Inherited trust
