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Join us on September 30 for a QSS colloquium with Assistant Professor Sultan Mehmood, New Economic School of Moscow
Title: Contract Enforcement in a Stateless Economy
Speaker: Sultan Mehmood, Assistant Professor of Economics, New Economic School of Moscow
Abstract: What makes people keep contracts without formal institutions? We present evidence that even in the absence of the state authority enforcing contracts, more than 70% fulfill their contractual obligations. In a sample of 3000 illicit gamblers in Pakistan, we provide experimental evidence for both reputation and credit constraints mechanisms to affect contract enforcement without a formal enforcement authority. Participants are significantly more likely to participate in the stateless economy and honor contractual obligations when faced with a threat of blacklisting from participating further in the informal institution. Extensions of the payback deadline also increases the honoring of contractual obligations. Overall, we provide experimental evidence that contract enforcement is possible without formal state enforcement and that reputation and credit constraints are key mechanisms for sustaining this economy.
Zoom is optional
https://dartmouth.zoom.us/j/92383122742?pwd=QWVFaHNPSG5oZEFtY2tEQWxtdk9Ddz09
ID: 923 8312 2742
Passcode: 218310
Events are free and open to the public unless otherwise noted.