How does generalized social trust — a Trustor's willingness to allow anonymous Trustees to make decisions affecting the Trustor's own welfare without an enforceable contract or guarantee, despite the Trustees' incentives to exploit or defraud — come to predominate in a community? This article is organized around a theoretical argument about the dynamics of generalized trust. This argument is deduced from a formal model built on assumptions that are common in the existing literature on trust. We find three results. First, generalized trust and trustworthiness can thrive if reliable credentials allow people to distinguish between trustworthy and untrustworthy partners. Second, under a system of credential-dependent trust, the proportion of trustworthy persons in the population tends to cycle between high and low levels in the long run. Hence, the model may explain the currently observed decline in generalized trust in the United States as a part of a long-term cycle. Finally, trustworthy types can coordinate to dampen the trustworthiness cycle and (under some conditions) maintain trustworthy types as the majority in a society.
Ahn, T.K. (2002) `Trust and Collective Action: Concepts and Causalities ', Paper presented at the Annual Meeting of the American Political Science Association, 28 August—1 September, 2002, Boston, MA.
2.
Alford, John, Carolyn Funk and John Hibbing (2005) `Are Political Orientations Genetically Transmitted?' , American Political Science Review99(2): 153—67.
3.
Axelrod, Robert (1984) The Evolution of Cooperation. New York: Basic Books.
4.
Axelrod, Robert (1997) The Complexity of Cooperation: Agent-based Models of Competition and Collaboration. Princeton, NJ: Princeton University Press.
5.
Bacharach, Michael and Diego Gambetta (2001) `Trust in Signs', in Karen Cook (ed.) Trust in Society, pp. 148—84. New York: Russell Sage Foundation.
6.
Baron, David (2000) `Legislative Organization with Informational Committees' , American Journal of Political Science44(3): 485—505.
7.
Bolle, Friedel and Matthew Braham (2003) `A Difficulty with Oaths: On Trust, Trustworthiness, and Signalling'. German Working Papers in Law and Economics Vol. 2003, Article 3.
8.
Boyd, Robert and Peter Richerson (1985) Culture and the Evolutionary Process. Chicago: University of Chicago Press.
9.
Boyd, Robert and Peter Richerson (1989) `The Evolution of Indirect Reciprocity', Social Networks4: 213—36.
10.
Cho, In-Koo and David Kreps (1987) `Signaling Games and Stable Equilibria', Quarterly Journal of Economics52(2): 179—221.
11.
Cochard F., Nguyen Van P. and M. Willinger (2004) `Trusting Behavior in a Repeated Investment Game ', Journal of Economic Behavior and Organization55(1): 31—44.
12.
Cook, Karen and Robin Cooper (2003) `Experimental Studies of Cooperation, Trust, and Social Exchange', in E. Ostrom and J. Walker (eds) Trust and Reciprocity: Interdisciplinary Lessons from Experimental Research, pp. 209—44. New York: Russell Sage Foundation.
13.
Curry, Timothy and Lynn Shibut (2000) `The Cost of the Savings and Loan Crisis: Truth and Consequences', FDIC Banking Review13(2): 26—35.
14.
Dasgupta, Partha (1988) `Trust as a Commodity', in D. Gambetta (ed.) Trust: Making and Breaking Cooperative Relations, pp. 49—72. New York: Basil Blackwell .
15.
Farrell, Joseph and Matthew Rabin (1996) `Cheap Talk', Journal of Economic Perspectives10(3): 103—18.
16.
Frank, Robert H. (1987) `If Homo Economicus Could Choose His Own Utility Function, Would He Want One With a Conscience?', American Economic Review77(4): 593—604.
17.
Frank, Robert H. (1988) Passions Within Reason: The Strategic Role of the Emotions. New York: W. W. Norton .
18.
Frank, Robert H. (1999) `Cooperation through Emotional Commitment', in R. Nesse (ed.) Evolution and the Capacity for Commitment, pp. 55—76. New York: Russell Sage Foundation.
19.
Friedman, Daniel and Nirvikar Singh (2003) `Equilibrium Vengeance', Working Paper. Economics Department, UC Santa Cruz, Santa Cruz, CA .
20.
Fudenberg, Drew and Jean Tirole (1991) `Perfect Bayesian Equilibrium and Sequential Equilibrium' , Journal of Economic Theory53: 236—60.
21.
Fukuyama, Francis (1995) Trust: The Social Virtues and the Creation of Prosperity . New York: The Free Press.
22.
Greif, Avner and David Laitlin (2004) `A Theory of Endogenous Institutional Change', American Political Science Review98(4): 633—52.
23.
Guöth, Werner (1995) `An Evolutionary Approach to Explaining Cooperative Behavior by Reciprocal Initiatives', International Journal of Game Theory24: 323—44.
24.
Guöth, Werner and Menahem Yaari (1992) `An Evolutionary Approach to Explaining Reciprocal Behavior in a Simple Strategic Game', in U. Witt (ed.) Explaining Process and Change: Approaches to Evolutionary Economics, pp. 23—34. Ann Arbor, MI: University of Michigan Press.
25.
Guöth, Werner, Hartmut Kliemt and Bezalel Peleg (2000) `Co-evolution of Preferences and Information in Simple Games of Trust', German Economic Review1(1): 83—110.
26.
Hardin, Russell (2001) `Conceptions and Explanations of Trust', in Karen Cook (ed.) Trust in Society , pp. 3—39. New York: Russell Sage Foundation.
27.
Hardin, Russell (2002) Trust and Trustworthiness. New York: Russell Sage Foundation.
28.
Hardin, Russell (2006) Trust. Cambridge: Polity Press.
29.
Kawachi, Ichiro, Bruce P. Kennedy and Kimberly Lochner (1997) `Long Live Community: Social Capital as Public Health', The American Prospect8(35): 56—9.
30.
Knack, Stephen and Philip Keefer (1997) `Does Social Capital Have an Economic Payoff? A Cross-country Investigation', Quarterly Journal of Economics112(4): 1251—88.
31.
Kreps, David (1990) `Corporate Culture and Economic Theory', in James Alt and Kenneth Shepsle (eds) Perspectives on Political Economy , pp. 90—143. New York: Cambridge University Press.
32.
Kreps, David and Robert Wilson (1982) `Sequential Equilibria', Econometrica50(4): 863—94.
33.
Maynard Smith, John and G.R. Price (1973) `The Logic of Animal Conflict', Nature246: 15—18.
34.
Messick, David and Roderick Kramer (2001) `Trust as a Form of Shallow Morality', in K. Cook (ed.) Trust in Society, pp. 89—118. New York: Russell Sage Foundation.
35.
Nestle, Marion (2002) Food Politics: How the Food Industry Influences Nutrition and Health. Berkeley, CA: University of California Press.
36.
North, Douglass (1990) Institutions, Institutional Change, and Economic Performance. Cambridge: Cambridge University Press.
37.
Orbell, John, Tomonori Morikawa, Jason Hartwig, James Hanley and Nicholas Allen (2004) ```Machiavellian'' Intelligence as a Basis for the Evolution of Cooperative Dispositions', American Political Science Review98(1): 1—17.
38.
Ostrom Elinor (2003) `Toward a Behavioral Theory Linking Trust, Reciprocity, and Reputation', in E. Ostrom and J. Walker (eds) Trust and Reciprocity: Interdisciplinary Lessons from Experimental Research, pp. 19—79. New York : Russell Sage Foundation.
39.
Patterson, Orlando (1999) `Liberty Against the Democratic State', in M. Warren (ed.) Democracy and Trust, pp. 151—207. Cambridge: Cambridge University Press.
40.
Paxton, Pamela (1999) `Is Social Capital Declining in the United States? A Multiple Indicator Assessment', American Journal of Sociology105(1): 88—127.
41.
Paxton, Pamela (2005) `Trust in Decline?', Contexts4(1): 40—6.
42.
Putnam, Robert (with Robert Leonardi and Raffaella Nanetti) (1993) Making Democracy Work. Princeton, NJ: Princeton University Press.
43.
Putnam, Robert (2000) Bowling Alone: The Collapse and Revival of American Community. New York: Simon and Schuster .
44.
Raloff, Janet (2004) `Ephedra Finale', Science News Online, 10 January. Available at http://www.sciencenews.org/articles/20040110/food.asp .
45.
Rao, Hayagreeva (1994) `The Social Construction of Reputation: Certification Contests, Legitimation, and the Survival of Organizations in the American Automobile Industry: 1895—1912', Strategic Management Journal15: 29—44.
46.
Resnick, Paul, Richard Zeckhauser, John Swanson and Kate Lockwood (2003) `The Value of Reputation on eBay: A Controlled Experiment'. Working Paper. Ann Arbor, MI: University of Michigan.
47.
Rothstein, Bo (2000) `Trust, Social Dilemmas and Collective Memories ', Journal of Theoretical Politics12(4): 477—501.
48.
Selten, Reinhard (1975) `A Reexamination of the Perfectness Concept for Equilibrium Points in Extensive Games', International Journal of Game Theory4: 25—55.
49.
Spence, Michael (1973) `Job Market Signaling', Quarterly Journal of Economics87(3): 355—74.
50.
U.S. Food and Drug Administration Center for Food Safety and Applied Nutrition (1981) `The Long Struggle For The 1906 Law'. Available online at http://www.cfsan.fda.gov/~lrd/history2.html.
51.
Yamagishi, Toshio (2001) `Trust as a Form of Social Intelligence', in Karen Cook (ed.) Trust in Society , pp. 121—47. New York: Russell Sage Foundation.
52.
Yamagishi, Toshio, Masako Kikushi and Motoko Kosugi (1999) `Trust, Gullibility, and Social Intelligence', Asian Journal of Social Psychology2(1): 145—61.
Supplementary Material
Please find the following supplemental material available below.
For Open Access articles published under a Creative Commons License, all supplemental material carries the same license as the article it is associated with.
For non-Open Access articles published, all supplemental material carries a non-exclusive license, and permission requests for re-use of supplemental material or any part of supplemental material shall be sent directly to the copyright owner as specified in the copyright notice associated with the article.
