English, Article, Journal or magazine article edition: Can Integrity Replace Institutions? Theory and Evidence Gilad D. Aharonovitz; Nathan Skuza; Faysal Fahs

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Bookmark: http://trove.nla.gov.au/version/126072
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Can Integrity Replace Institutions? Theory and Evidence
Author
  • Gilad D. Aharonovitz
  • Nathan Skuza
  • Faysal Fahs
Physical Description
  • preprint
Notes
  • Institutions are important for proper economic performance, but can be somewhat replaced by trust or other social norms. This study shows that institutions and trust can be replaced by integrity of the individual agents in the economy, regardless of any social arrangement. We construct a model of a transactions-based economy in which transactions are preceded by contracts, and show that any one of (1) institutions, (2) trust, or (3) integrity, can foster economic growth, while the absence of all three will lead to economic decay. The model also predicts that in the absence of institution and trust, dishonest agents may gain higher payoffs than honest agents. We construct data of economic performance of different social groups in Lebanon, measure integrity and other values of these groups, and support the latter conclusion with this data.
  • RePEc:wsu:wpaper:aharonovitz-3
  • Institutions are important for proper economic performance, but are replaceable by trust or other social norms. We show that when proper institutions and trust are missing, integrity of the individuals can replace them. We construct a model of a transactions-based economy with contracts preceding the transactions, and show that any one of (1) institutions, (2) trust, or (3) integrity, foster economic growth. We construct data of economic performance of social groups in Lebanon, measure integrity and other values of these groups, and use this data and data from Kenya to support one of the model’s predictions. Policy implications are discussed.
  • economic development, institutions, integrity, Lebanon, social norms, trust
  • RePEc:ces:ceswps:_2730
Language
  • English
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