EconomicsSeminar( 2018-15)

Topic: The Interaction of Communities, Religion, Governments, and Corruption in the Enforcement of Contracts and Social Norms

Coauthored with Matt Jackson (Stanford University)

Speaker: Yiqing XING, Johns Hopkins University

Time: Tuesday, June 12, 13:30-15:00p.m

Place: Room 217, Guanghua building2

Abstract:

Are informal communities and formal government policing substitutes or complements in enforcing norms of reciprocation and exchange? How do religion and corruption affect that interaction? We show that, in a cross-country analysis, GDP is positively correlated with a measure of confidence in reliance on others within a community, and with the interaction of the that measure and a measure of Rule of Law - suggesting that informal community enforcement and formal policing can be complements. We introduce a model in which people exchange informally within their community as well as externally on a market in which transactions are policed. We show that informal community enforcement and formal policing are complements: the news that someone was caught by the police can lead to community ostracism, bolstering incentives. Although community transactions offer less direct benefits, their presence lowers overall costs of enforcement and it may be welfare-maximizing for a society to rely on both community and formal exchange. We explain why the optimal mix of community and formal markets is discontinuous in underlying parameters. We also show that religion can enhance the complementarity between community and formal policing, while corruption undermines it.

SSRN link:

//papers.ssrn.com/sol3/papers.cfm?abstract_id=3153842

Introduction

Dr Yiqing XING is an Assistant Professor of Economics at Johns Hopkins University, Carey Business School. Prior to joining JHU, he got a PhD in Economics from Stanford University (2016), and master and bachelor degrees from Peking University. His research interests include social and economic networks, game theory, microeconomic theory, social economics.

Personal website: //www.yiqingxing.com/

Your particpation is warmly welcomed!