Agency as a Normative Theory of Trust: Towards Deriving Theoretical Functions of Social Trust from Agency Law

Abstract

To be given the authority to exercise discretion on behalf of another is the hallmark of trust for a human agent. This paper describes a normative theory and model of trust derived from principles of the U.S. law of agency. We posit that norms of agency help reduce the risk in deploying agents thus enabling greater trust. We demonstrate that the core principles of legal agency can be formalized into a novel, non-quantitative theory describing trust in agency relationships. Our formalized theory abstracts key concepts found in legal agency and trust relationships, providing an axiomatic-deductive treatment suitable for factors-based functional modeling and testing. The formalized theoretic and its derived model can be used as a reasoning paradigm for risk management and decision support as well as adjudication of the reasonableness of an agent’s exercise of discretion. In addition, the formalized theory can provide an empirically testable rendition of the agency normative concepts to test the efficacy of their prescriptions.