The Clan and the City: Sustaining Cooperation in China and Europe
Stanford University - Department of Economics; Canadian Institute for Advanced Research (CIFAR)
University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER); Centre for Economic Policy Research (CEPR); Center for Economic Studies and Ifo Institute for Economic Research (CESifo); Bocconi University - Department of Economics
July 5, 2012
Over the last millennium, the clan and the city have been the locus of cooperation in China and Europe respectively. This paper examines -- analytically, historically, and empirically -- the cultural, social, and institutional co-evolution that led to this bifurcation. We highlight that groups with which individuals identify are basic units of cooperation. Such groups impact institutional development because intra-group moral commitment reduces enforcement cost implying a comparative advantage in pursuing collective actions. Moral groups perpetuate due to positive feedbacks between morality, institutions, and the implied pattern of cooperation.
Number of Pages in PDF File: 52
Keywords: Cooperation, Moral Groups, China, Europe, Institutions, Development
JEL Classification: N00, O10, O50, P51, Z10
Date posted: July 6, 2012
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