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Adaptive Build-up and Breakdown of Trust: An Agent Based Computational Approach

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Author Info
Alexander Gorobets
Bart Nooteboom ()

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Abstract

This article employs Agent-Based Computational Economics (ACE) to investigate whether, and under what conditions, trust is viable in markets. The emergence and breakdown of trust is modeled in a context of multiple buyers and suppliers. Agents develop trust in a partner as a function of observed loyalty. They select partners on the basis of their trust in the partner and potential profit, with adaptive weights. On the basis of realized profits, they adapt the weight they attach to trust relative to profitability, and their own trustworthiness, modeled as a threshold of defection. Trust and loyalty turn out to be viable under fairly general conditions. Copyright Springer 2006

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File URL: http://hdl.handle.net/10.1007/s10997-006-9001-6
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Publisher Info
Article provided by Springer in its journal Journal of Management & Governance.

Volume (Year): 10 (2006)
Issue (Month): 3 (September)
Pages: 277-306
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:kap:jmgtgv:v:10:y:2006:i:3:p:277-306

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Web page: http://www.springerlink.com/link.asp?id=102940

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Related research
Keywords: agent-based computational economics; complex adaptive systems; governance; inter-firm relations; transaction costs; trust; C63; L14; L22; L24; P13;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Holland, John H & Miller, John H, 1991. "Artificial Adaptive Agents in Economic Theory," American Economic Review, American Economic Association, vol. 81(2), pages 365-71, May. [Downloadable!] (restricted)
  2. Kirman, Alan P. & Vriend, Nicolaas J., 2001. "Evolving market structure: An ACE model of price dispersion and loyalty," Journal of Economic Dynamics and Control, Elsevier, vol. 25(3-4), pages 459-502, March. [Downloadable!] (restricted)
  3. Wendelin Reich, 2004. "Reasoning About Other Agents: a Plea for Logic-Based Methods," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 7. [Downloadable!]
  4. Arthur, W Brian, 1993. "On Designing Economic Agents That Behave Like Human Agents," Journal of Evolutionary Economics, Springer, vol. 3(1), pages 1-22, February.
  5. Andreas Diekmann & Wojtek Przepiorka, 2005. "The Evolution of Trust and Reputation: Results from Simulation Experiments," Experimental 0508005, EconWPA. [Downloadable!]
  6. Klos, Tomas B. & Nooteboom, Bart, 2001. "Agent-based computational transaction cost economics," Journal of Economic Dynamics and Control, Elsevier, vol. 25(3-4), pages 503-526, March. [Downloadable!] (restricted)
  7. David Brichoux & Paul E. Johnson, 2002. "The Power of Commitment in Cooperative Social Action," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 5. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Nooteboom, Bart, 2006. "Human nature in the adaptation of trust," Discussion Paper 37, Tilburg University, Center for Economic Research. [Downloadable!]
  2. Nooteboom, Bart, 2006. "Forms, sources and processes of trust," Discussion Paper 40, Tilburg University, Center for Economic Research. [Downloadable!]
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