When is Trust Robust?

Luca Anderlini, Larry Samuelson and Daniele Terlizzese

Papers from arXiv.org

Abstract: We examine an economy in which interactions are more productive if agents can trust others to refrain from cheating. Some agents are scoundrels, who cheat at every opportunity, while others cheat only if the cost of cheating, a decreasing function of the proportion of cheaters, is sufficiently low. The economy exhibits multiple equilibria. As the proportion of scoundrels in the economy declines, the high-trust equilibrium can be disrupted by arbitrarily small perturbations or by arbitrarily small infusions of low-trust agents, while the low-trust equilibrium becomes impervious to perturbations and infusions of high-trust agents. Scoundrels may thus have the effect of making trust more robust.

Date: 2024-03, Revised 2024-11
New Economics Papers: this item is included in nep-evo, nep-gth, nep-mic and nep-soc
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http://arxiv.org/pdf/2403.12917 Latest version (application/pdf)

Related works:
Journal Article: When is trust robust? (2025)
Working Paper: When is Trust Robust? (2024)
Working Paper: When is Trust Robust? (2024)
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