Adaptive Build-up and Breakdown of Trust: An Agent Based Computational Approach

Alexander Gorobets and Bart Nooteboom

Journal of Management & Governance, 2006, vol. 10, issue 3, 277-306

Abstract: This article employs Agent-Based Computational Economics (ACE) to investigate whether, and under what conditions, trust is viable in markets. The emergence and breakdown of trust is modeled in a context of multiple buyers and suppliers. Agents develop trust in a partner as a function of observed loyalty. They select partners on the basis of their trust in the partner and potential profit, with adaptive weights. On the basis of realized profits, they adapt the weight they attach to trust relative to profitability, and their own trustworthiness, modeled as a threshold of defection. Trust and loyalty turn out to be viable under fairly general conditions. Copyright Springer 2006

Keywords: agent-based computational economics; complex adaptive systems; governance; inter-firm relations; transaction costs; trust; C63; L14; L22; L24; P13 (search for similar items in EconPapers)
Date: 2006
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Working Paper: Adaptive build-up and breakdown of trust: An agent based computational approach (2005)
Working Paper: Adaptive build-up and breakdown of trust: An agent based computational approach (2005)
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DOI: 10.1007/s10997-006-9001-6

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