The Problem of Trust in Monetary Theory

Guido K. Schaefer
Additional contact information
Guido K. Schaefer: Vienna University of Economics and Business Administration

Chapter 2 in Money, Trust, and Banking, 2005, pp 5-10 from Palgrave Macmillan

Abstract: Abstract In economic terminology lack of trust is a typical example of a market friction. Frictions only arise in imperfect markets. For example, if a trading partner has an informational advantage about important features of a deal, an agent may fear that the trading partner will exploit this informational advantage. Hence the less informed agent may have reasons not to trust her trading partner. A moral hazard problem exists. In this monograph asymmetric information between transaction partners is considered as the major source of lack of trust in exchange.1 The goal of this chapter is to discuss the problem of trust in exchange in existing monetary theory. Section 2.2 looks at the development of the concept in former research.

Keywords: Utility Function; Asymmetric Information; Trading Partner; Monetary Economic; Moral Hazard Problem (search for similar items in EconPapers)
Date: 2005
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-51326-6_2

Ordering information: This item can be ordered from
http://www.palgrave.com/9780230513266

DOI: 10.1057/9780230513266_2

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().