The Right Amount of Trust
---- Acknowledgements -----
We thank Oriana Bandiera, Sascha Becker, Bhajan Grewal, Bernard Salaniè, Guido Tabellini and Georg Weizacker for helpful suggestions and discussion, and seminar participants at the Einaudi Institute for Economics and Finance, the Kaler Meeting at UCLA, the London School of Economics and Toulouse University for helpful comments. We are greateful to the International Atlantic Economic Society for inviting Luigi Guiso to deliver the Robert A. Mundell distinguished address at the 67th meeting which relied on the material in this paper. Luigi Guiso thanks the EUI for financial support and LUISS University for making the LUISS lab available. Paola Giuliano thanks the UCLA-CIBER grant for financial support. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.