Contracts, opportunism and trust: Self-interest and social orientation

Lyons, Bruce and Mehta, Judith (1997) Contracts, opportunism and trust: Self-interest and social orientation. Cambridge Journal of Economics, 21 (2). pp. 239-257. ISSN 1464-3545

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This paper analyses the role of trust in facilitating efficient exchange relations when agents are vulnerable to opportunistic behaviour. Two distinct mechanisms supporting trust are distinguished: self-interested trust, SIT, which is forwardlooking, and socially-oriented trust, SOT, which has its roots in the past. The former is the only source of trust recognised in the mainstream economics literature, while the latter draws heavily from sociology. We develop the implications of isolated and of repeated exchange for the existence of SIT or SIT, and for the role of formal contracts in exchange relations. The paper concludes with a discussion of the feasibility of empirical testing to distinguish SIT from SOT.

Item Type: Article
Faculty \ School: Faculty of Social Sciences
Faculty of Social Sciences > School of Economics
UEA Research Groups: Faculty of Social Sciences > Research Groups > Industrial Economics
Faculty of Social Sciences > Research Centres > Centre for Competition Policy
Depositing User: Judith Mehta
Date Deposited: 30 Mar 2011 07:59
Last Modified: 08 Aug 2023 09:30
DOI: 10.1093/oxfordjournals.cje.a013668

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