In this paper we characterize a situation in which non-calculative trust has to play a role in the decision to cooperate. We then analyze the given situation in game theoretical terms and distinguish those aspects of players' decisions that are cooperative from those that may be interpreted as being trustful. We argue that the cooperative aspect relates to incentives while the trustful (and thus non-calculative) aspect of the decision is related to the framing of the situation.
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Paper provided by Utrecht School of Economics in its series Working Papers with number
05-12.
Find related papers by JEL classification: C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances Z13 - Other Special Topics - - Cultural Economics - - - Social Norms and Social Capital; Social Networks Economic Anthropology
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Oliver Hart & Bengt Holmstrom, 1986.
"The Theory of Contracts,"
Working papers
418, Massachusetts Institute of Technology (MIT), Department of Economics.