Trust under bounded rationality: Competence, value systems, unselfishness and the development of virtue

Abstract

Purpose: This paper analyses the foundations of trust in a context of bounded rationality to arrive to the conclusion that for trust to be necessary is because individuals are bounded rational.Design/methodology/approach: Building on previous theoretical work we conceptually develop the reasoning involved to arrive deductively that bounded rationality provides a rationale for the concept of trust that goes beyond a calculative notion.Findings: We show that there are four reasons for trust to exist and that people assess probabilities to each in order to determine whether to trust a recipient, depending on each of the four. We also add to previous work and show how bounded rationality provides additional arguments to show how competence, value systems and unselfishness are necessary to underpin trust. We provide additional foundations to their three factors and we, focused on bounded rationality. We add the development of virtue as a crucial fourth aspect, which supports the argument that trust can be reinforced between people and developed through time.Originality/value: The concept of trust has been analyzed empirically, but it lacks some theoretical foundations to show under which assumptions trust is a requirement that goes beyond mere calculations, and can be developed or not through time. We also introduce how the concept of virtue has a major role in trust development.