Trust is an important determinant of economic development. Understanding its origins is therefore critical. We develop a principal-agent model with heterogeneous players to determine the aggregate amount of trustworthiness and trust in a society. People are distributed according to their...

Trustworthiness is the basis for maximizing output in economic exchange and in explaining differences in standards of living around the world. A society's willingness to trust and the quality of its institutions have their origins in the trustworthiness of its citizens. We propose a theoretical...

Trust is an important component of social capital that has been linked to improvements in macroeconomic performance. The exogeneity of trust, however, is questionable. We develop a theoretical model in which trust is endogenous and depends on three factors: institutions for capture and...