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"To trust someone implies taking some risk. To be trustworthy implies that you will try to reduce risks to those who trust you even if it is costly to you to do so. For economists trust reduces the transaction cost of trading.

Berg, Joyce, John Dickhaut, and Kevin McCabe, "Trust, Reciprocity, and Social History," Games and Economic Behavior, (10)1995, pp. 122-142.

Trust is considered to be the the basic building block of any society. The extent of trust determines whether economic institutions can function. Take as an example the value of money. Banknotes are only as much worth as the trust of the consumers in the shops/banks to accept them in exchange for goods or services.

Interesting questions

  • What is trust? Discuss definitions from social sciences and compare them.
  • What is the role of trust in the economy?
  • Can we measure the trust consumers have in the economy?
  • Are there differences between interpersonal trust and trust in institutions?
  • Consider the case of interpersonal trust; economists measure such trust by experimental trust games, or by questionnaires; compare the questionnaire and experimental behavioral measures of trust.

Links & Literature

Do you have questions or want more information about this topic? Send an email to pucofsociety@fm.ru.nl.

These guidelines has been created by the Nijmegen School of Management.