Working Papers, Department of Economics, Aarhus School of Business, University of Aarhus
Love Thy Neighbor: Bonding versus Bridging Trust
() and Gert Tinggaard Svendsen
Abstract: We study how trust is generated in society. In a
model, we analyze two communities. In the bonding community
people do not
trust people outside their regular networks. In the
bridging community people
choose to trust strangers when they meet
them. The hypothesis is that when
trust is only bonding, it cannot
accumulate. Our theoretical contribution is to
show that when trust is
only bonding then the economy’s level of trust moves
to an unstable
equilibrium that may under certain conditions ‡uctuate forever.
however, trust is also bridging, then trust will accumulate. Future
should seek to establish the appropriate institutional
framework for establishing
the optimal mix between both bonding and
bridging social capital in society.
Keywords: Trust; two-sector model; chaos; (follow links to similar papers)
JEL-Codes: A12; C61; D90; O41; (follow links to similar papers)
28 pages, September 2, 2005
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