Law v. Trust

34 Pages Posted: 26 Oct 2000  

Larry E. Ribstein

University of Illinois College of Law (deceased); PERC - Property and Environment Research Center

Multiple version iconThere are 2 versions of this paper

Date Written: October 23, 2000

Abstract

The special concept of trust does not provide a distinct justification for mandatory legal rules. Although regulation might lead parties to decide to rely on others, it does not produce the sort of transaction-cost-reducing trust that should matter for public policy - that is, trust based on altruism, norms, personal relationships, and social capital. Moreover, using mandatory rules to increase trust may have precisely the opposite effect of increasing distrust and undermining trust-creation devices. Thus, trust provides an additional argument in favor of enforcing contracts.

JEL Classification: D6, G3, K0, K2, K3, L5

Suggested Citation

Ribstein, Larry E., Law v. Trust (October 23, 2000). George Mason Law & Economics Research Paper No. 00-38. Available at SSRN: https://ssrn.com/abstract=247224 or http://dx.doi.org/10.2139/ssrn.247224

Larry Edward Ribstein (Contact Author)

University of Illinois College of Law (deceased)

PERC - Property and Environment Research Center

2048 Analysis Drive
Suite A
Bozeman, MT 59718
United States

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