By facilitating mutually beneficial transactions in the absence of perfect legal institutions, trust is a crucial ingredient for economic development. We focus on the conceptual connections between imperfect legal institutions, uncertainty and vulnerability, and their consequences on trust, with the goal of understanding the role for a social safety net in economic development. We study a model...

in this article, the set of institutions which embody the form and contents of the economic system of islam is introduced. by institutions, it is meant the economic freedoms, the government, ownership, motivation, the mechanism for coordinating economic activities, power, organization and bureaucracy. after explaining islam’s outlook regarding these institutions, the form and the contents of th...

There is a growing literature which analyses, using cross-country data, whether institutions or geography is the most important deep determinant of economic development. The empirical proxies for institutions used in this literature focus on the definition of institutions, formal and informal. This study argues that the concept of informal institutions is similar to social capital. However, the...

There is a growing literature which analyses, using cross-country data, whether institutions or geography is the most important deep determinant of economic development. The empirical proxies for institutions used in this literature focus on the definition of institutions, formal and informal. This study argues that the concept of informal institutions is similar to social capital. However, the...

We present a model incorporating both social and economic components, and analyze their interaction. The notion of a social asset, an attribute that has value only because of the social institutions governing society, is introduced. In the basic model, agents match on the basis of income and unproductive attributes. An attribute has value in some equilibrium social institutions (matching patter...

This paper explores some perverse features that can emerge when social contracts are moved from a social vacuum to a setting of social interdependence. In particular we note incentives that might exist in conjunction with externality problems that yield situations in which: (1) social contracts reduce social wealth; (2) sub-global social contracts are Pareto inferior to the absence of social co...