Advertisement

Theory and Decision

, Volume 74, Issue 3, pp 311–333 | Cite as

Trust, inequality and the market

  • Shaun P. Hargreaves Heap
  • Jonathan H. W. Tan
  • Daniel John Zizzo
Article

Abstract

This article examines, experimentally, whether inequality affects the social capital of trust in non-market and market settings. We consider three experimental treatments, one with equality, one with inequality but no knowledge of the income of other agents, and one with inequality and knowledge. Inequality, particularly when it is known, has a corrosive effect on trusting behaviours in this experiment. Agents appear to be less sensitive to known relative income differentials in markets than they are in the non-market settings, but trust in markets appears generally more vulnerable to the introduction of inequality than in the non-market setting.

Keywords

Trust Income inequality Market Social capital 

JEL Classification

C72 C91 Z13 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Alesina A., La Ferrara E. (2002) Who trusts others?. Journal of Public Economics 85: 207–234CrossRefGoogle Scholar
  2. Anderson L., Mellor J., Milyo J. (2006) Induced heterogeneity in trust experiments. Experimental Economics 9: 223–235CrossRefGoogle Scholar
  3. Ball S., Eckel C., Grossman P., Zame W. (2001) Status in markets. Quarterly Journal of Economics 16: 161–188CrossRefGoogle Scholar
  4. Becker G. S. (1971) The economics of discrimination. Chicago University Press, ChicagoGoogle Scholar
  5. Berg J., Dickaut J., McCabe K. (1995) Trust, reciprocity and social history. Games and Economic Behaviour 10: 122–142CrossRefGoogle Scholar
  6. Beugelsdijk S., deGroot H., van Schaik A. (2004) Trust and economic growth: Robustness analysis. Oxford Economic Papers 56: 118–134CrossRefGoogle Scholar
  7. Camerer C. (2003) Behavioural game theory. Princeton University Press, PrincetonGoogle Scholar
  8. Falk A., Fischbacher U. (2001) Distributional consequences and intentions in a model of reciprocity. Annales d’Economie et de Statistique 63-64: 39–62Google Scholar
  9. Fehr E., Kirchsteiger G., Riedl A. (1993) Does fairness prevent market clearing? An experimental investigation. Quarterly Journal of Economics 108: 437–460CrossRefGoogle Scholar
  10. Fehr E., Schmidt K. (1999) A theory of fairness, competition, and cooperation. Quarterly Journal of Economics 114: 817–868CrossRefGoogle Scholar
  11. Folbre N., Nelson J. (2000) For Love or money—Or both?. Journal of Economic Perspectives 14: 123–140CrossRefGoogle Scholar
  12. Glaeser E., Laibson D., Scheinkman J., Soutter C. (2000) Measuring trust. Quarterly Journal of Economics 115: 811–846CrossRefGoogle Scholar
  13. Guala F. (2005) The methodology of experimental economics. Cambridge University Press, New YorkCrossRefGoogle Scholar
  14. Guerra G., Zizzo D. J. (2004) Trust responsiveness and beliefs. Journal of Economic Behaviour and Organization 55: 25–30CrossRefGoogle Scholar
  15. Hargreaves Heap S., Zizzo D. J. (2009) The value of groups. American Economic Review 99: 295–323CrossRefGoogle Scholar
  16. Hirsch F. (1977) The social limits to growth. Routledge and Kegan Paul, LondonGoogle Scholar
  17. Hirschman A. (1982) Rival interpretations of market society: Civilizing, destructive, or feeble?. Journal of Economic Literature 20: 1463–1484Google Scholar
  18. Knack S., Keefer P. (1997) Does social capital have and economic pay-off? Cross-country investigation. Quarterly Journal of Economics 112: 1251–1288CrossRefGoogle Scholar
  19. Lane R. (1991) The market experience. Cambridge University Press, CambridgeCrossRefGoogle Scholar
  20. Lei V., Vesely F. (2010) In-group versus out-group trust: The impact of income inequality. Southern Economic Journal 76: 1049–1063CrossRefGoogle Scholar
  21. Macours K. (2011) Increasing inequality and civil conflict in Nepal. Oxford Economic Papers 63: 1–26CrossRefGoogle Scholar
  22. Putnam R., Leonardi R., Nanetti R.Y. (1993) Making democracy work: Civic traditions in modern Italy. Princeton University Press, PrincetonGoogle Scholar
  23. Rabe-Hesketh, S., Skrondal, A., & Pickles, A. (2004). GLLAMM Manual. U.C. Berkeley Division of Biostatistics Working Paper 160, Berkeley.Google Scholar

Copyright information

© Springer Science+Business Media, LLC. 2011

Authors and Affiliations

  • Shaun P. Hargreaves Heap
    • 1
  • Jonathan H. W. Tan
    • 2
  • Daniel John Zizzo
    • 1
  1. 1.University of East AngliaNorwichUK
  2. 2.University of NottinghamNottinghamUK

Personalised recommendations