کد مقاله | کد نشریه | سال انتشار | مقاله انگلیسی | نسخه تمام متن |
---|---|---|---|---|
5071845 | 1477072 | 2014 | 16 صفحه PDF | دانلود رایگان |
- Interaction between entrepreneurs and investors.
- An agent chooses whether to develop a moral conscience.
- More guilt-based societies show more expropriation and a lower net price of capital.
- Also, smaller firms, decreased capital inflows and less social welfare.
- The results of a smaller emphasis on pride are in the same direction.
We examine implications of a society's cultural emphasis on moral sentiments. Entrepreneurs and investors interact in a game that entails both adverse selection and moral hazard; entrepreneurs may attempt to breach their contracts and expropriate investors. An agent is born into a particular culture but chooses whether to develop a moral conscience and thereby subject himself to moral sentiments. In equilibrium, societies that place less emphasis on guilt exhibit a lower risk of expropriation in contracts, a greater net price of capital, a larger size of firms, increased capital inflows and greater social welfare. The results of a greater emphasis on pride are in the same direction.
Journal: Games and Economic Behavior - Volume 87, September 2014, Pages 34-49