This study tests three hypotheses on data from a survey on employment relations conducted in Sweden in 2006. The first hypothesis implies that the extent to which an employee perceives formal institutions as fair and duly enforced increases the probability that he/she will behave cooperatively. The second hypothesis states that an employee's trust in the opposite party should have equivalent effects. The last hypothesis holds that an employee's perception of formal institutions as fair and duly enforced increases his/her trust in the opposite party. All three hypotheses are supported by the data. The interpretation is that there is indeed an effect on cooperative behavior and willingness to enter into flexible contracts from perceptions of fair and enforced institutions, but it is indirect and mediated by attitudes of trust.
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