This paper provides a contribution to the definition of endogenous conditions that induce cooperative behaviour and trust in a principal-agent mode[ with adverse selection. Differently from the standard literature, the paper shows that the principal can actively generate trust and cooperation by the agent. It is assumed that the latter's utility function includes self-esteem among its variables. Therefore when the principal pays a gift or a monetary transfer of adequate magnitude, failure to reciprocate generates disutility to the agent. The optimal contract with trust, thus defined, is compared with alternative solution and the role o[ complementary institutions is stressed.

Basili, M., Duranti, C., & Franzini, M. (2004). Network, Trust and Institutional Complementarities. RIVISTA DI POLITICA ECONOMICA, 1-2, 159-179.

Network, Trust and Institutional Complementarities

BASILI, MARCELLO;
2004

Abstract

This paper provides a contribution to the definition of endogenous conditions that induce cooperative behaviour and trust in a principal-agent mode[ with adverse selection. Differently from the standard literature, the paper shows that the principal can actively generate trust and cooperation by the agent. It is assumed that the latter's utility function includes self-esteem among its variables. Therefore when the principal pays a gift or a monetary transfer of adequate magnitude, failure to reciprocate generates disutility to the agent. The optimal contract with trust, thus defined, is compared with alternative solution and the role o[ complementary institutions is stressed.
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11365/7824
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