Essays on Microeconomic Analysis of Choice, Trust, and Organised Crime with an Emphasis in Mexico

This thesis consists of three independent chapters that aim to contribute applying theoretical and empirical microeconomic tools to the understanding of acute social problems present in every society, and that are of particular relevance to contemporary Mexico. Each respective chapter investigates issues related to aspirations and identity adoption; trust and its relationship with social gap and crime; and the competitive interaction between a kleptocratic government and criminal organisations. The first essay presents an axiomatic model of type formation and how features of social environment can determine suboptimal type adoption. In the model a type search process is defined for agents with incomplete information on their true type. The model incorporates a type search process that finishes with an adopted type. Results are linked with the literature on extended choice models with frames, offering a rational on frame formation processes for individuals with limited information on opportunity sets. A second piece of work empirically investigates possible correlates of trust in Mexico. This work focuses on the association of trust with crime and social gap. Trust is considered an asset that contributes to favour transactions and bonding within societies, thus it is important to understand what affects it, while crime and inequality constitute two of the most severe problems historically faced by Mexican society. The third chapter looks at competitive interaction between a kleptocratic government and organised crime when they compete in crime markets. In this work the State and the criminal organisation are modelled as two-level organisations that aim at capturing as much rents from society as they can competing in criminal markets. Comparative statics analysis is presented to study this interaction and public policy implications under some scenarios. Final commentaries are included to summarise results and highlight important points from findings on the three essays