Trust pervades human societies. It is indispensable in friendships, love, family, organizations and politics. Interpersonal trust is a mental construct with implications for social functioning and economic behavior as studied by trust games, for example.
Although neoclassical economic theory suggests that trust in strangers is irrational, trust and trustworthiness can be widely observed across societies. In fact, reciprocity exists as a basic element of human relationships and behavior, and this is accounted for in the trust extended to an anonymous counterpart (Berg et al., 1995). The nature of trusting behavior is a multi-faceted part of psychology, investigated in terms of underlying dispositions, intergroup processes, and cognitive expectations (Evans & Krueger, 2009). Behavioral and biological evidence indicates that trusting is not simply a special case of risk-taking, but based rather on important forms of social preferences, such as betrayal aversion (Fehr, 2010).
Both trust and trustworthiness increase when individuals are closer socially, but the latter declines when partners come from different social groups, such as nationality or race. Furthermore, high status individuals are found to be able to elicit more trustworthiness in others (Glaeser et al., 2000). For example, CEOs are considerably more trusting and exhibit more trustworthiness than students. Trust seems to reinforce trustworthy behavior. In a behavioral experiment, trustworthiness was highest when the threat to punish was available but not used, and lowest when the threat to punish was actually used. Paradoxically, however, most CEOs and students used the punishment threat; although CEOs made use of it significantly less (Fehr & List, 2004).
Berg, J., Dickhaut, J. & McCabe, K. (1995). Trust, reciprocity, and social history. Games and Economic Behavior, 10(1), 122-142.
Evans, A. & Krueger, J. (2009). The psychology (and economics) of trust. Social and Personality Psychology Compass, 3(6), 1003-1017.
Fehr, E. (2010). On the economics and biology of trust. Journal of the European Economics Association, 7(2-3), 235-266.
Fehr, E. & List, J. (2004). The hidden costs and returns of incentives: Trust and trustworthiness among CEOs. Journal of the European Economics Association, 2(5), 743-771.
Glaeser, E., Laibson, D., Scheinkman, J. & Soutter, C. (2000). Measuring trust. The Quarterly Journal of Economics, 115(3), 811-846.