Economics of trust: Its nature, measures, determinants and application

This paper aims to present a concise literature review on what trust is and its importance from a societal perspective and discuss the formal definition of trust, its categorisation and how it is being measured. It presented the conceptualisation of trust in economics and how it leads to its different categorisations (e.g., interpersonal vs. intrapersonal and generalised vs. localised trust) and its measurement methodologies (i.e., surveys vs. games and experiments). It also surveyed its existing determinants ranging from socio-demographics (e.g., age and sex) to endogenous and exogenous factors (e.g., income class and institutions). Lastly, it also discussed the real-world economic implications of trust as a desirable condition for any kind of social interaction.