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dc.contributor.authorKarlan, Dean
dc.contributor.authorMobius, Markus
dc.contributor.authorRosenblat, Tanya
dc.contributor.authorSzeidl, Adam
dc.date.accessioned2009-06-08T18:37:23Z
dc.date.issued2009
dc.identifier.citationKarlan, Dean, Markus Mobius, Tanya Rosenblat, and Adam Szeidl. Forthcoming. Trust and social collateral. Quarterly Journal of Economics 124, no. 3.en
dc.identifier.issn0033-5533en
dc.identifier.urihttp://nrs.harvard.edu/urn-3:HUL.InstRepos:3051620
dc.description.abstractThis paper builds a theory of trust based on informal contract enforcement in social networks. In our model, network connections between individuals can be used as social collateral to secure informal borrowing. We define network-based trust as the highest amount one agent can borrow from another agent, and derive a reduced-form expression for this quantity which we then use in three applications. (1) We predict that dense networks generate bonding social capital that allows transacting valuable assets, while loose networks create bridging social capital that improves access to cheap favors like information. (2) For job recommendation networks, we show that strong ties between employers and trusted recommenders reduce asymmetric information about the quality of job candidates. (3) Using data from Peru, we show empirically that network-based trust predicts informal borrowing, and we structurally estimate and test our model.en
dc.description.sponsorshipEconomicsen
dc.language.isoen_USen
dc.publisherMIT Pressen
dc.relation.isversionofhttp://www.mitpressjournals.org/loi/qjecen
dc.relation.hasversionhttp://www.nber.org/papers/w13126.pdfen
dash.licenseOAP
dc.titleTrust and Social Collateralen
dc.relation.journalQuarterly Journal of Economicsen
dash.depositing.authorMobius, Markus
dc.identifier.doi10.1162/qjec.2009.124.3.1307
dash.contributor.affiliatedMobius, Markus


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