Open Access. Powered by Scholars. Published by Universities.®
Business Law, Public Responsibility, and Ethics Commons™
Open Access. Powered by Scholars. Published by Universities.®
- Discipline
Articles 1 - 2 of 2
Full-Text Articles in Business Law, Public Responsibility, and Ethics
Social Trust And Economic Governance, Fali Huang
Social Trust And Economic Governance, Fali Huang
Research Collection School Of Economics
The paper investigates the dynamic relationship between social trust and economic governance using a principal-agent model with stochastic returns. To mitigate the inherent moral hazard problem both intrinsic and extrinsic incentives are useful. The cooperative tendency of an agent measures his intrinsic discipline against shirking, the distribution of which characterizes social trust in society. The economic governance methods include direct monitoring and efficiency wage. The main results are the following. An agent with a higher cooperative tendency needs less monitoring and a lower wage to make effort, which brings higher profit for the principal. But competition among principals for more …
Social Trust, Cooperation, And Human Capital, Fali Huang
Social Trust, Cooperation, And Human Capital, Fali Huang
Research Collection School Of Economics
The importance of social trust on economic growth has been suggested by many empirical works. This paper formalizes the concept of social trust and studies its formation process in a game theoretic setting. It provides plausible explanations for a wide range of empirical and experimental findings. The main results of the paper are as follows. For utility-maximizing players, cooperation arises in one-period prisoner’s dilemmas if and only if there is social trust. The amount of social trust in a given game is determined by the distribution of players’ cooperative tendency. Cooperative tendency is in essence a component of human capital …