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Trust and the Regulation of Economic Activities
in: European Commission, DG Research and Innovation, Trust at Risk: Implications for EU Policies and Institutions
Book chapters, contributions to collected volumes, Luxembourg, 2017,
Trust is expected to improve economic efficiency because private contracts and cooperative behaviour are facilitated through lower costs of information, negotiation, control and enforcement. Following this economic argument, the efficiency of research investments should be higher, the higher the trust relationship between funder and the receiver of the money is as costs for information, negotiation, control and enforcement decrease. However, lower levels of trust will increase the likelihood for demanding the regulation of activities to compensate for a lack of information, misconduct or fraud, increasing the costs for control and enforcement in turn. In low-trust societies the expected harm of scientific activities is potentially high and citizens demand more comprehensive regulation.
JEL-Codes:D72, H7
Keywords:EU Institution, Regulation, Trust, Economic and Social Cohesion
Research group:Macroeconomics and Public Finance