Economists Rediscover Hayek

Nunn and Wantchekon (2011),

Our notion of culture is taken from research in evolutionary anthropology that views culture as decision-making rules-of-thumb employed in uncertain or complex environments. Using theoretic models, Boyd and Richerson (1985, 2005) show that if information acquisition is either costly or imperfect, it can be optimal for individuals to develop heuristics or rules-of-thumb in decision making. By relying on general beliefs about the “right” thing to do in different situations, individuals may not behave in a manner that is optimal in every instance, but they save on the costs of obtaining the information necessary to always behave optimally. In these models, different behavioral rules evolve through a process of natural selection determined by the relative payoffs from different rules-of-thumb. Within this framework, the hypothesis we test is whether the environment of insecurity caused by the slave trade increased the returns to rules-of-thumb based on mistrust relative to rules-of-thumb based on trust, thus causing a culture of greater mistrust to develop.

The paper develops a model, based on the authors’ selection of instrumental variables, to test for the role that the slave trade had in forming modern institutions (rules). They find evidence that supports the contention that the slave trade has influenced the heuristics that certain African populations (those living in areas that were involved with the slave trade) use. Instead of heuristics that promote association and a greater division of labor, the slave trade influenced decision-making rules in the opposite way.

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