ABSTRACT
This chapter analyses some of the key findings from the behavioural economics literature and discusses their implications for small states. It focuses on how social preferences like trust, inequality aversion, altruism and reciprocity influence economic outcomes in small states. The chapter addresses the expansive behavioural economics literature on social preferences, focusing on the concepts of trust, inequality aversion, altruism and reciprocity. It reviews the economics literature on small states focusing on both the definition of 'small' as well as key characteristics which pertain to states, drawing particular attention to those which may be ripe for juxtaposition with the social preferences literature. One potential pitfall with the analysis is that small states are somewhat under-represented in our dataset due to a lack of data on trust levels in the countries. Attitudes towards tax avoidance and evasion are slightly stronger in larger countries, although the magnitude of this positive correlation is very weak.
