Honor systems can work. A well known example is Caltech, where almost all exams are take home exams which students typically take alone in their room or in some other isolated place.

Caltech may have an advantage in this because the classes are hard and it gets harder for you each year. If you need to and successfully do cheat, at least in a class that is at all relevant to your field, you are quite likely to flounder in subsequent years.

So it may not be that Caltech students follow the Honor system because they are actually more honorable than most--it may be because they are smart enough to realize that cheating isn't really going to help them.