Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/284280 
Authors: 
Year of Publication: 
2023
Series/Report no.: 
CeDEx Discussion Paper Series No. 2023-05
Publisher: 
The University of Nottingham, Centre for Decision Research and Experimental Economics (CeDEx), Nottingham
Abstract: 
Does market exposure shape civic values and rules that constrain opportunistic behavior and foster generalized cooperation? I investigate this question using a natural experiment on market location from Ethiopia, where exchange is prone to cooperation problems from asymmetric information and absence of third-party enforcement. I find a strong negative effect of market distance on civic values and rule formation. These results arise because groups develop different kinds of exchange structures to alleviate cooperation problems from market failure. In groups further away from markets, individuals rely on eponymous exchange and reputation in dense social network, which fosters parochial cooperation. In contrast, in groups near markets, impersonal and ephemeral exchange with strangers creates a demand for civic values and rules, which together with community sanctioning fosters generalized cooperation. Distance from markets without asymmetric information has no effect on civic values and rules.
Subjects: 
Markets
civic values
rules
cooperation
market failure
asymmetric information
Ethiopia
JEL: 
C93
D8
N97
Z13
Document Type: 
Working Paper

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