Trust and Identity in a Small, Post-Socialist, Post-Crisis Society

Christian Bjørnskov, Zeljko Bogetic (), Arye Hillman () and Milenko Popovic ()

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Abstract: The principal focus in the substantial literature on impediments to economic development has been on the inadequacies of policies and governance. However, successful economic development requires effectiveness of markets and incentives for investment, which in turn require trust. This paper reports on trust in a development context. The paper uses trust experiments, a post-experiment survey, and econometric analysis relating trust to identity and other personal attributes in the setting of Montenegro, a small, recently-independent, post-socialist, post-crisis society. External validity was sought by providing sufficient material reward to balance identity-related expressive motives and by having two groups of subjects, one usual university students and another group that, while also students, was somewhat older and had had greater market or ommercial experience. The paper reviews cultural priors that can be expected to affect trust and distinguishes between generalized trust that can be socially beneficial and particularized trust that can be disadvantageous for development. The empirical results suggest that trust among private individuals is not an impediment to development in Montenegro. As a result, policy reform can improve economic and social outcomes. However, the results redirect the focus to issues of governance and political entrenchment as potential explanations for impediments to development.

Keywords: particularized trust; Generalized trust; identity; trust game; trust experiment; betrayal aversion; expressive behavior; political entrenchment; Montenegro (search for similar items in EconPapers)
JEL-codes: D03 O12 P16 Z13 (search for similar items in EconPapers)
Date: 2014-04-11
New Economics Papers: this item is included in nep-exp and nep-soc
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Working Paper: Trust and identity in a small, post-socialist, post-crisis society (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:esprep:95968

DOI: 10.1596/1813-9450-6828

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