The Fragility and Robustness of Trust

Jim Engle-Warnick (jim.engle-warnick@mcgill.ca) and Robert Slonim

No 2001-W15, Economics Papers from Economics Group, Nuffield College, University of Oxford

Abstract: Although it is well known that trust is an important component of the fulfilment of incomplete contracts, less is known regarding how robust it is to past experiences. We present an experiment in which trust is required for transactions to occur, and nature provides a series of shocks along the path of play. Although the shocks have a short-term impact, we find that trust is surprisingly robust in the long-term. We argue that trust, through fragile in one way, is in another way more robust and stable over time than previously known. The results shed light on the resilence of economic institutions with incomplete contracts.

Keywords: Trust; Repeated Games; Experimental Economics (search for similar items in EconPapers)
JEL-codes: C72 C91 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2001-08-22
New Economics Papers: this item is included in nep-exp
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:nuf:econwp:0115

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