DP9072 The Clan and the City: Sustaining Cooperation in China and Europe
|Author(s):||Avner Greif, Guido Tabellini|
|Publication Date:||July 2012|
|Keyword(s):||China, Europe, Institutions, Public goods, Values|
|JEL(s):||N00, O10, O50, P51, Z10|
|Programme Areas:||International Macroeconomics, Public Economics, Development Economics, Economic History|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=9072|
Over the last millennium, the clan and the city have been the locus of cooperation in China and Europe respectively. This paper examines - analytically, historically, and empirically - the cultural, social, and institutional co-evolution that led to this bifurcation. We highlight that groups with which individuals identify are basic units of cooperation. Such groups impact institutional development because intra-group moral commitment reduces enforcement cost implying a comparative advantage in pursuing collective actions. Moral groups perpetuate due to positive feedbacks between morality, institutions, and the implied pattern of cooperation.