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Social Capital as Good Culture
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1725-6704
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EUI ECO; 2007/57
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GUISO, Luigi, SAPIENZA, Paola, ZINGALES, Luigi, Social Capital as Good Culture, EUI ECO, 2007/57 - https://hdl.handle.net/1814/7690
Abstract
To explain the extremely long-term persistence (more than 500 years) of positive
historical experiences of cooperation (Putnam, 1993), we model the intergenerational
transmission of priors about the trustworthiness of others. We show that this transmission
tends to be biased toward excessively conservative priors. As a result, societies can be
trapped in a low-trust equilibrium. In this context, a temporary shock to the return to
trusting can have a permanent effect on the level of trust. We validate the model by
testing its predictions on the World Values Survey data and the German Socio Economic
Panel. We also present some anecdotal evidence that these priors are reflected in the
novels originated in different parts of the country.