Scandinavian Working Papers in Economics
Working Papers,
University of Aarhus, Aarhus School of Business, Department of Economics
No 05-7: Love Thy Neighbor: Bonding versus Bridging Trust
Odile Poulsen () and Gert Tinggaard Svendsen ()
Additional contact information
Odile Poulsen: Department of Economics, Aarhus School of Business, Postal: The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark
Gert Tinggaard Svendsen: Aarhus University, Institut for Public Policy, Postal: Aarhus University, Building 331, Institut for Public Policy, Bartholins Alle, 8000 Aarhus C
Abstract: We study how trust is generated in society. In a two-sector
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.
If, however, trust is also bridging, then trust will accumulate. Future research
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
28 pages, September 2, 2005
Full text files
05-7_odpgts.pdf
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