Year: 2018
Type: article
Abstract: Lack of well-functioning formal institutions leads to reliance on social networks to enforce informal contracts. Social proximity and network centrality may affect cooperation. To assess the extent to which networks substitute for enforcement, we conducted high-stakes games across 34 Indian villages. We randomized subjects’ partners and whether contracts were enforced to estimate how partners’ relative network position differentially matters across contracting environments. While socially close pairs cooperate even without enforcement, distant pairs do not. Individuals with more central partners behave more cooperatively without enforcement. Capacity for cooperation in the absence of contract enforcement therefore depends on the subjects’ network position. (JEL C93, D86, K12, O15, O17, Z13)
DOI: 10.1257/app.20150057
Institutions: Stanford University, Tufts University, Harvard University
Language: English
Subfield: Safety Research
Field: Social Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1534344645