Trust and Trustworthiness in an Economy with Heterogeneous Individuals
AbstractWe analyze the determinants of trust and trustworthiness in a matching equilibrium when agents have heterogeneous predispositions towards trusting and trustworthy behavior, there is transmission of information via both individual and collective reputations, and successful matches may persist. In new matches, more social trustworthiness breeds more individual trust. However, whether more social trust breeds more or less individual trustworthiness depends on the observability of individual histories of play. If it is low, more trust generally breeds less trustworthiness, while if it is high, more trust breeds more trustworthiness. We combine the links between social trust and trustworthiness to construct a general trust/trustworthiness equilibrium and discuss its properties.
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Bibliographic InfoPaper provided by The Center for Economic Research and Graduate Education - Economic Institute, Prague in its series CERGE-EI Working Papers with number wp305.
Date of creation: Sep 2006
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Trust; trustworthiness; reputation.;
Find related papers by JEL classification:
- C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-12-09 (All new papers)
- NEP-CBE-2006-12-09 (Cognitive & Behavioural Economics)
- NEP-EVO-2006-12-09 (Evolutionary Economics)
- NEP-POL-2006-12-09 (Positive Political Economics)
- NEP-SOC-2006-12-09 (Social Norms & Social Capital)
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