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Policies for Happiness$
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Stefano Bartolini, Ennio Bilancini, Luigino Bruni, and Pier Luigi Porta

Print publication date: 2016

Print ISBN-13: 9780198758730

Published to Oxford Scholarship Online: May 2016

DOI: 10.1093/acprof:oso/9780198758730.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 27 November 2021

Promoting Trust through Institutional Design

Promoting Trust through Institutional Design

Chapter:
(p.199) 9 Promoting Trust through Institutional Design
Source:
Policies for Happiness
Author(s):

Vittorio Pelligra

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780198758730.003.0010

If, as economists, we are interested in promoting people’s happiness, we should devote much attention and effort to understanding the process that leads from individual and interactive choices to happy or unhappy outcomes. In interactive situations, this process is almost always constrained by the rules of the game and quite often such rules are designed according to the prevalent economic theory. In recent years, however, such prevalent view has been challenged, on a descriptive ground, by behavioral economists. The chapter discusses the role of two different sets of behavioral principles, namely intra-personal and inter-personal mechanisms. These mechanisms describe how real people react to individual internally generated and social relationally generated incentives. Since laws and institutions can be thought of as (dis)incentive providing systems designed to favor a desired conduct and hinder dysfunctional behaviors, the understanding of the dynamics behind intra-personal and inter-personal mechanisms is essential to the design of efficient institutions and normative schemes.

Keywords:   incentives, interpersonal relations, institutional design, happiness, economic theory

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