Trust in the Shadow of the Courts

G. Brennan, W. Güth, H. Kliemt

    Research output: Working paperDiscussion paperOther research output

    274 Downloads (Pure)


    If contract enforcers must be randomly selected from the same population and thus are as opportunistic as ordinary traders could a system of adjudication nevertheless increase the degree to which contractual obligations on large anonymous markets are fulfilled? Adopting an indirect evolutionary approach with endogenous preference formation it can be shown that without superior behaviour of adjudicators an adjudication system can induce untrustworthy traders to behave as if trustworthy. However, in the presence of occasional mistakes adjudication will merely slow down but not fully eliminate the evolutionary advantage of untrustworthy types. Only if arbitrators become judges who receive a fixed income occasional mistakes will not favour untrustworthy types. But even then under non-optimal court politics and unfavourable parameter constellations in a low trust environment the introduction of courts may in fact contribute to the crowding out of the trustworthy.
    Original languageEnglish
    Place of PublicationTilburg
    PublisherCentER, Center for Economic Research
    Number of pages34
    Publication statusPublished - 1997

    Publication series

    NameCentER Discussion Paper


    • Evolutionary game theory
    • intrinsic motivation
    • trust relationships
    • court system
    • legal litigation
    • Hobbesian problem of social order
    • crowding out


    Dive into the research topics of 'Trust in the Shadow of the Courts'. Together they form a unique fingerprint.

    Cite this