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Title:Can integrity replace institutions? : theory and evidence PDF Logo
Authors:Aharonovitz, Gilad D.
Skuza, Nathan
Fahs, Faysal
Issue Date:2009
Series/Report no.:CESifo working paper 2730
Abstract: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.
Subjects:economic development
social norms
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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