This paper is a reply to Barry Ickes' critique of my paper "Trust versus Illusion: What is Driving Demonetization in … Russia?" in which I show that the data reject Barry Ickes' Virtual Economy explanation of barter in Russia in favor of an … institutional explanation based on the lack of trust. …

. This paper confronts with empirical evidence two approaches to explain barter in Russia: the 'illusion view' and the 'trust … Russia is producing value added by enabling this sector to sell its output at a higher price than its market value. The … 'trust view' sees barter as an institution to deal with the absence of trust and liquidity in the Russian economy. We …

- specifically the trust environment - and its internal structure. We show experimentally that exogenously imposed culture … endogenously leads to variation in organizational form. We prime trust using past performance from a pilot study and demonstrate … that the level of trust within an organization affects division of labor and consequently organizational productivity. This …

principal-cost theory, which posits that each firm's optimal governance structure minimizes the sum of principal costs, produced …. The empirical predictions produced by principal-cost theory are more accurate than those produced by any theory focused … solely on agency costs. Principal-cost theory also suggests different policy prescriptions. Rather than banning some …