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Love Thy Neighbor: Bonding versus Bridging Trust

Author

Listed:
  • Poulsen, Odile

    (Department of Economics, Aarhus School of Business)

  • Svendsen, Gert Tinggaard

    (Aarhus University, Institut for Public Policy)

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.

Suggested Citation

  • Poulsen, Odile & Svendsen, Gert Tinggaard, 2005. "Love Thy Neighbor: Bonding versus Bridging Trust," Working Papers 05-7, University of Aarhus, Aarhus School of Business, Department of Economics.
    • Handle: RePEc:hhs:aareco:2005_007
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    References listed on IDEAS

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    1. Aditya Goenka & Odile Poulsen, 2005. "Indeterminacy and labor augmenting externalities," Journal of Economics, Springer, vol. 86(1), pages 143-166, December.
    2. Drugeon, Jean-Pierre & Venditti, Alain, 2001. "Intersectoral external effects, multiplicities & indeterminacies," Journal of Economic Dynamics and Control, Elsevier, vol. 25(5), pages 765-787, May.
    3. Greif, Avner, 1989. "Reputation and Coalitions in Medieval Trade: Evidence on the Maghribi Traders," The Journal of Economic History, Cambridge University Press, vol. 49(4), pages 857-882, December.
    4. Gert T. Svendsen, 2003. "The Political Economy of the European Union," Books, Edward Elgar Publishing, number 2621.
    5. Nishimura, Kazuo & Yano, Makoto, 1994. "Social capital as a public good and an oscillatory behaviour," Ricerche Economiche, Elsevier, vol. 48(3), pages 185-193, September.
    6. Gunnar L.H Svendsen & Gert T. Svendsen, 2004. "The Creation and Destruction of Social Capital," Books, Edward Elgar Publishing, number 3276.
    7. Anders Poulsen & Gert Svendsen, 2005. "Social Capital and Endogenous Preferences," Public Choice, Springer, vol. 123(1), pages 171-196, April.
    8. Jess Benhabib & Kazuo Nishimura, 2012. "Competitive Equilibrium Cycles," Springer Books, in: John Stachurski & Alain Venditti & Makoto Yano (ed.), Nonlinear Dynamics in Equilibrium Models, edition 127, chapter 0, pages 75-96, Springer.
    9. Jean-Pierre Drugeon & Odile Poulsen & Alain Venditti, 2003. "On Intersectoral allocations, factors substitutability and multiple long-run growth paths," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 21(1), pages 175-183, January.
    10. Kurrild-Klitgaard, Peter & Svendsen, Gert Tinggaard, 2003. "Rational Bandits: Plunder, Public Goods, and the Vikings," Public Choice, Springer, vol. 117(3-4), pages 255-272, December.
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    Cited by:

    1. Ana Kopren & Hans Westlund, 2021. "Bridging versus Bonding Social Capital in Entrepreneurs’ Networks: The Case of Post-Conflict Western Balkans," Sustainability, MDPI, vol. 13(6), pages 1-18, March.

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    More about this item

    Keywords

    Trust; two-sector model; chaos;
    All these keywords.

    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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