When is Trust Robust?

Luca Anderlini, Larry Samuelson () and Daniele Terlizzese ()
Additional contact information
Larry Samuelson: Yale University, https://economics.yale.edu/people/larry-samuelson
Daniele Terlizzese: Einaudi Institute for Economics and Finance, https://www.eief.it/eief/index.php/research/90-about-us/176-daniele-terlizzese

Working Papers from Georgetown University, Department of Economics

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 always cheat, 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 infusions of low-trust agents, while the low-trust equilibrium becomes impervious to perturbations and infusions of high-trust agents. The resilience of trust may thus hinge upon the prevalence of scoundrels.

Keywords: Trust; Robustness; Fragility; Assimilation; Disruption (search for similar items in EconPapers)
JEL-codes: C72 C79 D02 D80 (search for similar items in EconPapers)
Pages: 38
Date: 2024-03-18
New Economics Papers: this item is included in nep-evo, nep-gth, nep-mic and nep-soc
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Related works:
Journal Article: When is trust robust? (2025)
Working Paper: When is Trust Robust? (2024)
Working Paper: When is Trust Robust? (2024)
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