When is Trust Robust? (2403.12917v2)
Abstract: We examine an economy in which interactions are more productive if agents can trust others to refrain from cheating. Some agents are scoundrels, who cheat at every opportunity, while others cheat only if the cost of cheating, a decreasing function of the proportion of cheaters, is sufficiently low. The economy exhibits multiple equilibria. As the proportion of scoundrels in the economy declines, the high-trust equilibrium can be disrupted by arbitrarily small perturbations or by arbitrarily small infusions of low-trust agents, while the low-trust equilibrium becomes impervious to perturbations and infusions of high-trust agents. Scoundrels may thus have the effect of making trust more robust.
- Anderlini, L., and D. Terlizzese (2017): “Equilibrium Trust,” Games and Economic Behavior, 102, 624–644.
- Arrow, K. J. (1974): The limits of organization. WW Norton & Company.
- Berg, J., J. Dickhaut, and K. McCabe (1995): “Trust, Reciprocity, and Social History,” Games and Economic Behavior, 10, 122–142.
- Jackson, M. O. (2020): “A Typology of Social Capital and Associated Network Measures,” Social Choice and Welfare, 54, 311–336.
- Putnam, R. D. (2000): Bowling Alone. New York: Simon and Schuster.
- Slovic, P. (1993): “Perceived risk, trust, and democracy,” Risk analysis, 13(6), 675–682.
- (1999): “Trust, emotion, sex, politics, and science: Surveying the risk-assessment battlefield,” Risk analysis, 19, 689–701.
Sponsored by Paperpile, the PDF & BibTeX manager trusted by top AI labs.
Get 30 days freePaper Prompts
Sign up for free to create and run prompts on this paper using GPT-5.
Top Community Prompts
Collections
Sign up for free to add this paper to one or more collections.