Trust and Arena Size. Expectations, Trust, and Institutions Co-Evolving, and Their Critical Population and Group Sizes
We develop a formal approach to the emergence of institutionalized trust in the context of the evolution of cooperation, with a particular focus on the relevance of the size dimension of this process. While trust in general has been widely investigated, as has the size dimension of structural emergence, both have rarely been analyzed together in an integrated approach to the co-evolution of institutions, trust, and the size of their populations and carrier groups. This then also helps explaining general(ized) trust. In a game-theoretic set-up, we determine critical levels of expectations as a factor facilitating the emergence of institutionalized cooperation in an arena, or population. Critical levels of expectations (to meet a cooperative agent) and arena size turn out to be interdependent. A carrier group, or platform, emerges under further conditions. It encompasses only a part of the larger population, indicating a maximum critical mass of cooperators (a meso-size) that can be sustained in a population, under an additional set of agency capabilities, particularly partner selection. Once cooperation has been established as the prevalent behavioral pattern in a number of platforms, its habituation as an institution may lead to a contingent perception of trustworthiness of agents. Habituated cooperation, its generalization, spillover or transfer across platforms, in combination with the perceived trustworthiness of others may lead to an increasing general trust level in the larger population. The approach chosen thus allows identifying critical factors of general trust among strangers in a larger population even in one-shot interactions. The significant differences observed in actual general-trust levels among countries, highly correlated with their macro performances, can be explained from the countries’ different (and mainly ‘inner’) size conditions in the deep structures of their interaction arenas and resulting platforms (rather than just total population size), contributing to the persistent varieties of capitalism.
|Date of creation:||2012|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Stephen Knack & Philip Keefer, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1251-1288.
- James W. Friedman, 1971. "A Non-cooperative Equilibrium for Supergames," Review of Economic Studies, Oxford University Press, vol. 38(1), pages 1-12.
- Masahiko Aoki, 2013.
"Endogenizing institutions and institutional changes,"
Chapters,in: Comparative Institutional Analysis, chapter 16, pages 267-297
Edward Elgar Publishing.
- Aoki, Masahiko, 2007. "Endogenizing institutions and institutional changes," Journal of Institutional Economics, Cambridge University Press, vol. 3(01), pages 1-31, April.
- Harmsen-van Hout, Marjolein J.W. & Dellaert, Benedict G.C. & Herings, P. Jean-Jacques, 2008. "Behavorial Effects in Individual Decisions of Network Formation," Research Memorandum 019, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
- Harmsen - van Hout, Marjolein J.W. & Dellaert, Benedict G.C. & Herings, P. Jean-Jacques, 2010. "Behavioral Effects in Individual Decisions of Network Formation: Complexity Reduces Payoff Orientation and Social Preferences," FCN Working Papers 5/2010, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
- Christoforou, Asimina, 2010. "Social capital and human development: an empirical investigation across European countries," Journal of Institutional Economics, Cambridge University Press, vol. 6(02), pages 191-214, June.
- Vittorio Pelligra, 2011. "Intentions, Trust and Frames: A Note on Sociality and the Theory of Games," Review of Social Economy, Taylor & Francis Journals, vol. 69(2), pages 163-188.
- V. Pelligra, 2007. "Intentions, Trust and Frames: A note on Sociality and the Theory of Games," Working Paper CRENoS 200702, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
- Henrich, Joseph, 2004. "Cultural group selection, coevolutionary processes and large-scale cooperation," Journal of Economic Behavior & Organization, Elsevier, vol. 53(1), pages 3-35, January.
- Dunbar, R. I. M., 2011. "Constraints on the evolution of social institutions and their implications for information flow," Journal of Institutional Economics, Cambridge University Press, vol. 7(03), pages 345-371, September.
- Veblen, Thorstein, 1899. "The Theory of the Leisure Class," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number veblen1899.
- Catherine Tucker, 2008. "Social Interactions, Network Fluidity and Network Effects," Working Papers 08-30, NET Institute.
- Werner Güth & Hartmut Kliemt, 2010. "(Un)Bounded Rationality in Decision Making and Game Theory – Back to Square One?," Games, MDPI, Open Access Journal, vol. 1(1), pages 1-13, March.
- Elsner, Wolfram & Heinrich, Torsten, 2009. "A simple theory of 'meso'. On the co-evolution of institutions and platform size--With an application to varieties of capitalism and 'medium-sized' countries," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(5), pages 843-858, October.
- Till Grune-Yanoff & Paul Schweinzer, 2008. "The roles of stories in applying game theory," Journal of Economic Methodology, Taylor & Francis Journals, vol. 15(2), pages 131-146.
- Rose, David C., 2014. "The Moral Foundation of Economic Behavior," OUP Catalogue, Oxford University Press, number 9780199360598, April.
- Rose, David C., 2011. "The Moral Foundation of Economic Behavior," OUP Catalogue, Oxford University Press, number 9780199781744, April.
- Lazaric Nathalie & Lorenz Edward, 1998. "Trust and Economic Learning," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 8(2-3), pages 1-10, June.
- Wolfram Elsner, 2012. "The Theory of Institutional Change Revisited: The Institutional Dichotomy, Its Dynamic, and Its Policy Implications in a More Formal Analysis," Journal of Economic Issues, M.E. Sharpe, Inc., vol. 46(1), pages 1-44, March.
- Mailath, George J. & Samuelson, Larry, 2006. "Repeated Games and Reputations: Long-Run Relationships," OUP Catalogue, Oxford University Press, number 9780195300796, April.
- Binmore, Ken, 2011. "Natural Justice," OUP Catalogue, Oxford University Press, number 9780199791484, April.
- Geoffrey Hodgson & Kainan Huang, 2012. "Evolutionary game theory and evolutionary economics: are they different species?," Journal of Evolutionary Economics, Springer, vol. 22(2), pages 345-366, April.
- Miki Malul & Mosi Rosenboim & Tal Shavit, 2010. "Costs of Mistrust between Ethnic Majority and Minorities: Evidence from Israel," Review of Social Economy, Taylor & Francis Journals, vol. 68(4), pages 447-464.
- Friederike Mengel, 2009. "Conformism and cooperation in a local interaction model," Journal of Evolutionary Economics, Springer, vol. 19(3), pages 397-415, June.
- Mengel, Friederike, 2007. "Conformism and Cooperation in a Local Interaction Model," MPRA Paper 4051, University Library of Munich, Germany.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:40393. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.