IDEAS home Printed from https://ideas.repec.org/p/arx/papers/2403.12917.html
   My bibliography  Save this paper

When is Trust Robust?

Author

Listed:
  • Luca Anderlini
  • Larry Samuelson
  • Daniele Terlizzese

Abstract

We examine an economy in which interactions are more productive if agents can trust others to refrain from cheating. Some agents are scoundrels, who cheat at every opportunity, while others cheat only if the cost of cheating, a decreasing function of the proportion of cheaters, is sufficiently low. The economy exhibits multiple equilibria. As the proportion of scoundrels in the economy declines, the high-trust equilibrium can be disrupted by arbitrarily small perturbations or by arbitrarily small infusions of low-trust agents, while the low-trust equilibrium becomes impervious to perturbations and infusions of high-trust agents. Scoundrels may thus have the effect of making trust more robust.

Suggested Citation

  • Luca Anderlini & Larry Samuelson & Daniele Terlizzese, 2024. "When is Trust Robust?," Papers 2403.12917, arXiv.org, revised Nov 2024.
    • Handle: RePEc:arx:papers:2403.12917
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/2403.12917
    File Function: Latest version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Paul Slovic, 1993. "Perceived Risk, Trust, and Democracy," Risk Analysis, John Wiley & Sons, vol. 13(6), pages 675-682, December.
    2. Daron Acemoglu & Matthew O. Jackson, 2017. "Social Norms and the Enforcement of Laws," Journal of the European Economic Association, European Economic Association, vol. 15(2), pages 245-295.
    3. Pedro Dal Bó & Guillaume R. Fréchette, 2018. "On the Determinants of Cooperation in Infinitely Repeated Games: A Survey," Journal of Economic Literature, American Economic Association, vol. 56(1), pages 60-114, March.
    4. John Duffy & Huan Xie & Yong-Ju Lee, 2013. "Social norms, information, and trust among strangers: theory and evidence," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 52(2), pages 669-708, March.
    5. Jean Tirole & Roland Bénabou, 2006. "Incentives and Prosocial Behavior," American Economic Review, American Economic Association, vol. 96(5), pages 1652-1678, December.
    6. George J. Mailath & Larry Samuelson, 2001. "Who Wants a Good Reputation?," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 68(2), pages 415-441.
    7. Matthew O. Jackson, 2020. "A typology of social capital and associated network measures," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 54(2), pages 311-336, March.
    8. Joel Sobel, 2002. "Can We Trust Social Capital?," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 139-154, March.
    9. James Andreoni & B. Douglas Bernheim, 2009. "Social Image and the 50-50 Norm: A Theoretical and Experimental Analysis of Audience Effects," Econometrica, Econometric Society, vol. 77(5), pages 1607-1636, September.
    10. Tore Ellingsen & Magnus Johannesson, 2008. "Pride and Prejudice: The Human Side of Incentive Theory," American Economic Review, American Economic Association, vol. 98(3), pages 990-1008, June.
    11. Paul Slovic, 1999. "Trust, Emotion, Sex, Politics, and Science: Surveying the Risk‐Assessment Battlefield," Risk Analysis, John Wiley & Sons, vol. 19(4), pages 689-701, August.
    12. Johnson, Noel D. & Mislin, Alexandra A., 2011. "Trust games: A meta-analysis," Journal of Economic Psychology, Elsevier, vol. 32(5), pages 865-889.
    13. Elster, Jon, 1989. "Social Norms and Economic Theory," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 99-117, Fall.
    14. Mailath, George J. & Samuelson, Larry, 2006. "Repeated Games and Reputations: Long-Run Relationships," OUP Catalogue, Oxford University Press, number 9780195300796, Decembrie.
    15. Michihiro Kandori, 1992. "Social Norms and Community Enforcement," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 59(1), pages 63-80.
    16. Berg Joyce & Dickhaut John & McCabe Kevin, 1995. "Trust, Reciprocity, and Social History," Games and Economic Behavior, Elsevier, vol. 10(1), pages 122-142, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Boulu-Reshef, Béatrice & Kuechle, Graciela & Rohland, Luise Marie, 2024. "Signaling trustworthiness with the choice of a prosocial project: Theory and experiment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 108(C).
    2. te Velde, Vera L., 2022. "Heterogeneous norms: Social image and social pressure when people disagree," Journal of Economic Behavior & Organization, Elsevier, vol. 194(C), pages 319-340.
    3. Boulu-Reshef, Béatrice & Kuechle, Graciela, 2025. "Preemptive signaling and the emergence of trust in entrepreneurial investments," Journal of Behavioral and Experimental Finance, Elsevier, vol. 45(C).
    4. Kenju Kamei & Artem Nesterov, 2024. "Endogenous monitoring through voluntary reporting in an infinitely repeated prisoner's dilemma game: experimental evidence," Economica, London School of Economics and Political Science, vol. 91(364), pages 1553-1577, October.
    5. Erik O. Kimbrough & Alexander Vostroknutov, 2016. "Norms Make Preferences Social," Journal of the European Economic Association, European Economic Association, vol. 14(3), pages 608-638, June.
    6. Simon Gächter & Esther Kaiser & Manfred Königstein, 2024. "Incentive contracts crowd out voluntary cooperation: Evidence from gift-exchange experiments," Discussion Papers 2024-02, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    7. Pierpaolo Battigalli & Martin Dufwenberg, 2022. "Belief-Dependent Motivations and Psychological Game Theory," Journal of Economic Literature, American Economic Association, vol. 60(3), pages 833-882, September.
    8. Anastasia Danilov & Dirk Sliwka, 2017. "Can Contracts Signal Social Norms? Experimental Evidence," Management Science, INFORMS, vol. 63(2), pages 459-476, February.
    9. Guttman, Joel M. & Goette, Lorenz, 2015. "Reputation, volunteering, and trust: Minimizing reliance on taste-based explanations," European Journal of Political Economy, Elsevier, vol. 40(PB), pages 375-386.
    10. Prasenjit Banerjee & Rupayan Pal & Ada Wossink & James Asher, 2021. "Heterogeneity in Farmers’ Social Preferences and the Design of Green Payment Schemes," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 78(2), pages 201-226, February.
    11. Carattini, Stefano & Gillingham, Kenneth & Meng, Xiangyu & Yoeli, Erez, 2024. "Peer-to-peer solar and social rewards: Evidence from a field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 219(C), pages 340-370.
    12. Linardi, Sera & McConnell, Margaret A., 2011. "No excuses for good behavior: Volunteering and the social environment," Journal of Public Economics, Elsevier, vol. 95(5), pages 445-454.
    13. Calabuig, Vicente & Fatas, Enrique & Olcina, Gonzalo & Rodriguez-Lara, Ismael, 2016. "Carry a big stick, or no stick at all," Journal of Economic Psychology, Elsevier, vol. 57(C), pages 153-171.
    14. Johannesson Magnus & Östling Robert & Ranehill Eva, 2010. "The Effect of Competition on Physical Activity: A Randomized Trial," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-31, September.
    15. Christoph Engel & Paul A. M. Van Lange, 2021. "Social mindfulness is normative when costs are low, but rapidly declines with increases in costs," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 16(2), pages 290-322, March.
    16. Jim Engle-Warnick & Andreas Leibbrandt, 2006. "Who Gets The Last Word? An Experimental Study Of The Effect Of A Peer Review Process On The Expression Of Social Norms," Departmental Working Papers 2006-11, McGill University, Department of Economics.
    17. Daron Acemoglu & Alexander Wolitzky, 2015. "Sustaining Cooperation: Community Enforcement vs. Specialized Enforcement," NBER Working Papers 21457, National Bureau of Economic Research, Inc.
    18. Ellingsen, Tore & Johannesson, Magnus & Mollerstrom, Johanna & Munkhammar, Sara, 2012. "Social framing effects: Preferences or beliefs?," Games and Economic Behavior, Elsevier, vol. 76(1), pages 117-130.
    19. Barmettler, Franziska & Fehr, Ernst & Zehnder, Christian, 2012. "Big experimenter is watching you! Anonymity and prosocial behavior in the laboratory," Games and Economic Behavior, Elsevier, vol. 75(1), pages 17-34.
    20. Goeschl, Timo & Jarke, Johannes, 2014. "Trust, but verify? When trustworthiness is observable only through (costly) monitoring," WiSo-HH Working Paper Series 20, University of Hamburg, Faculty of Business, Economics and Social Sciences, WISO Research Laboratory.

    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C79 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Other
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:2403.12917. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.