Trust and delegation: Theory and evidence

Gur N., Bjørnskov C.

Journal of Comparative Economics, vol.45, no.3, pp.644-657, 2017 (SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 45 Issue: 3
  • Publication Date: 2017
  • Doi Number: 10.1016/j.jce.2016.02.002
  • Journal Name: Journal of Comparative Economics
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus
  • Page Numbers: pp.644-657
  • Keywords: Social trust, Economic development, Delegation
  • Istanbul Medipol University Affiliated: Yes


Social trust is associated with good economic performance, but little is known about the transmission mechanisms connecting trust and performance. We explore the effect of trust on delegation decisions. In a theoretical framework, we note that delegation is a low-cost option when management decisions can be implemented without monitoring. This option is, however, risky and more likely to be profitable in higher-trust environments. In a set of cross-country regressions, we show a strong association between trust and delegation, which is increasing in economic sophistication.