The Coevolution of Trust and Institutions in Anonymous and Non-anonymous Communities

Werner Güth () and Axel Ockenfels

Papers on Strategic Interaction from Max Planck Institute of Economics, Strategic Interaction Group

Abstract: We report on a research program that employs the indirect evolutionary approach to analyze how the institutional environment drives the evolution of trust and trustworthiness through the evolution of moral preferences, and how in turn the evolution of preferences shapes the evolution of the rules of the game. In particular, we describe how the ability to detect trustworthiness in non-anonymous communities supports the evolution of trust and thus crowds out legal institutions. If anonymous interaction prevents type detection, legal institutions such as courts and legal insurance may play a decisive role for the emergence of trust.

Date: 2002-03
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