Sudden trust collapse in networked societies

João da Gama Batista, Jean-Philippe Bouchaud () and Damien Challet
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João da Gama Batista: MAS - Mathématiques Appliquées aux Systèmes - EA 4037 - Ecole Centrale Paris
Jean-Philippe Bouchaud: CFM - Capital Fund Management

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Abstract: Trust is a collective, self-fulfilling phenomenon that suggests analogies with phase transitions. We introduce a stylized model for the build-up and collapse of trust in networks, which generically displays a first order transition. The basic assumption of our model is that whereas trust begets trust, panic also begets panic, in the sense that a small decrease in trust may be amplified and ultimately lead to a sudden and catastrophic drop of trust. We show, using both numerical simulations and mean-field analytic arguments, that there are extended regions of the parameter space where two equilibrium states coexist: a well-connected network where confidence is high, and a poorly connected network where confidence is low. In these coexistence regions, spontaneous jumps from the well-connected state to the poorly connected state can occur, corresponding to a sudden collapse of trust that is not caused by any major external catastrophe. In large systems, spontaneous crises are replaced by history dependence: whether the system is found in one state or in the other essentially depends on initial conditions. Finally, we document a new phase, in which agents are connected yet distrustful.

Keywords: phase transition; crisis; sudden collapse; hysteresis; collective behavior; trust; networks (search for similar items in EconPapers)
Date: 2015-03
Note: View the original document on HAL open archive server: https://hal.science/hal-01119120v1
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Citations: View citations in EconPapers (5)

Published in The European Physical Journal B: Condensed Matter and Complex Systems, 2015, 88 (3), pp.55. ⟨10.1140/epjb/e2015-50645-1⟩

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Journal Article: Sudden trust collapse in networked societies (2015)
Working Paper: Sudden Trust Collapse in Networked Societies (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01119120

DOI: 10.1140/epjb/e2015-50645-1

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