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Delayed and Inconsistent Information and the Evolution of Trust

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  • Michael Manapat
  • David Rand

Abstract

Trust is essential in virtually all economic interactions. In this paper, we build on previous work analyzing the “trust game” from the perspective of evolutionary dynamics. There are two players: an “investor” and a “trustee.” The investor begins with one monetary unit and can choose to transfer it to the trustee. The transfer, if made, is multiplied by a factor b>1 representing the gains that arise from cooperation. The trustee can then return a fraction of his choosing to the investor. Previous work has shown that adding information to this game can lead to trusting and trustworthy behavior. But in those models, information spreads instantaneously and investors never face conflicting information. Here, we relax both of these assumptions. We introduce delays in information propagation so that an investor may still be acting on old information after a trustee has changed his behavior. And we give investors “memories” and thereby allow for the possibility that they might face conflicting information about trustees. In both cases, we find that the trust and trustworthiness induced by information is robust to delays and conflicts. Even if it takes time for information to spread, and even if investors sometimes deem information to be unreliable, the benefits of trust are realized with just moderate levels of information about trustees. We conclude that information (or “reputation”) is a robust explanation for the trust and trustworthiness observed among humans. Copyright Springer Science+Business Media, LLC 2012

Suggested Citation

  • Michael Manapat & David Rand, 2012. "Delayed and Inconsistent Information and the Evolution of Trust," Dynamic Games and Applications, Springer, vol. 2(4), pages 401-410, December.
  • Handle: RePEc:spr:dyngam:v:2:y:2012:i:4:p:401-410
    DOI: 10.1007/s13235-012-0055-6
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    References listed on IDEAS

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    1. Zak, Paul J & Knack, Stephen, 2001. "Trust and Growth," Economic Journal, Royal Economic Society, vol. 111(470), pages 295-321, April.
    2. Edward L. Glaeser & David I. Laibson & José A. Scheinkman & Christine L. Soutter, 2000. "Measuring Trust," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 811-846.
      • Glaeser, Edward Ludwig & Laibson, David I. & Scheinkman, Jose A. & Soutter, Christine L., 2000. "Measuring Trust," Scholarly Articles 4481497, Harvard University Department of Economics.
    3. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2004. "The Role of Social Capital in Financial Development," American Economic Review, American Economic Association, vol. 94(3), pages 526-556, June.
    4. La Porta, Rafael, et al, 1997. "Trust in Large Organizations," American Economic Review, American Economic Association, vol. 87(2), pages 333-338, May.
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    6. Iris Bohnet & Steffen Huck, 2004. "Repetition and Reputation: Implications for Trust and Trustworthiness When Institutions Change," American Economic Review, American Economic Association, vol. 94(2), pages 362-366, May.
    7. Cox, James C., 2004. "How to identify trust and reciprocity," Games and Economic Behavior, Elsevier, vol. 46(2), pages 260-281, February.
    8. Bohnet, Iris & Zeckhauser, Richard, 2004. "Trust, risk and betrayal," Journal of Economic Behavior & Organization, Elsevier, vol. 55(4), pages 467-484, December.
    9. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2006. "Does Culture Affect Economic Outcomes?," Journal of Economic Perspectives, American Economic Association, vol. 20(2), pages 23-48, Spring.
    10. repec:hrv:faseco:30726298 is not listed on IDEAS
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    Cited by:

    1. Corina E. Tarnita, 2015. "Fairness and Trust in Structured Populations," Games, MDPI, Open Access Journal, vol. 6(3), pages 1-17, July.
    2. Manapat, Michael L. & Nowak, Martin A. & Rand, David G., 2013. "Information, irrationality, and the evolution of trust," Journal of Economic Behavior & Organization, Elsevier, vol. 90(S), pages 57-75.
    3. Paul Rauwolf & Joanna J. Bryson, 2018. "Expectations of Fairness and Trust Co-Evolve in Environments of Partial Information," Dynamic Games and Applications, Springer, vol. 8(4), pages 891-917, December.

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