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Declining trust in growing China: A dilemma between growth and socio-economic damage

Author

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  • Dai, Shuanping
  • Elsner, Wolfram

Abstract

Declining general trust has become a serious social issue in China in recent years. This paper attempts to understand and analyze this social phenomenon from a social interaction perspective. Based on a repeated prisoners´ dilemma game on networks, it finds that the evolution of general trust is dependent on changes of the social interaction structure, and the increases of both social and spatial distance may explain a decrease of the levels of cooperation and general trust. In addition, we find that the traditional Chinese family and clan networks culture has an ambiguous effect on general trust, and simple reactive social "homing behavior" might be critical for China´s future economic development. In order to recover the general trust level, a major strategic option for China, and for fast growing countries in economic transition in general, is to (re-)develop appropriate network structures and properties, as our model indicates.

Suggested Citation

  • Dai, Shuanping & Elsner, Wolfram, 2015. "Declining trust in growing China: A dilemma between growth and socio-economic damage," Working Papers on East Asian Studies 101/2015, University of Duisburg-Essen, Institute of East Asian Studies IN-EAST.
    • Handle: RePEc:zbw:udedao:1012015
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    More about this item

    Keywords

    economic transition; growth and development; migration; trust; games on networks; China;
    All these keywords.

    JEL classification:

    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D30 - Microeconomics - - Distribution - - - General
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • P21 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Planning, Coordination, and Reform
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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