Sudden Trust Collapse in Networked Societies

Jo\~ao da Gama Batista, Jean-Philippe Bouchaud and Damien Challet

Papers from arXiv.org

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.

Date: 2014-09, Revised 2015-03
New Economics Papers: this item is included in nep-cmp, nep-net and nep-soc
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Published in Eur. Phys. J. B 88 (3) 55 (2015)

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Journal Article: Sudden trust collapse in networked societies (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:1409.8321

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