Trust-based Exchange Research Articles

The paradoxical decline and growth of trust as a function of borderline personality disorder trait count: Using discontinuous growth modelling to examine trust dynamics in response to violation and repair.

Borderline personality disorder (BPD) is associated with paradoxical trust cognitions and behaviours. While BPD is associated with difficulty forming trust and maintaining cooperation in trust-based exchanges, design and analytical methodology best suited to reveal the temporal ebb and flow of trust have been underutilized. We used an economic game to examine the trajectories of trust as it forms, dissolves, and restores in response to trust violation and repair, and to explain how these vary as a function of borderline pathology. Young adults (N = 234) played a 15-round trust game in which partner trustworthiness was varied to create three phases: trust formation, trust violation, and trust restoration. Discontinuous growth modelling was employed to capture the trends in trust over time and their relationship with BPD trait count. BPD trait count was associated with an incongruous pattern of trust behaviour in the form of declining trust when interacting with a new and cooperative partner, and paradoxically, increasing trust following multiple instances of trust violation by that partner. BPD trait count was also associated with trust restoring at a faster rate than it was originally formed. By adopting a methodology that recognizes the dynamic nature of trust, this study illustrated at a micro level how relational disturbances may be produced and maintained in those with a moderate to high BPD trait count. Further investigation of the factors and processes that underlie these incongruous trust dynamics is recommended.

Аутопсия сотрудничества: алмазные дилеры и ограничения сделок, основанных на доверии

Аутопсия сотрудничества: алмазные дилеры и ограничения сделок, основанных на доверии

An Autopsy of Cooperation: Diamond Dealers and the Limits of Trust-Based Exchange

Both academic and popular representations of the diamond industry describe trust-based relations that sustain trade and support the industry’s private arbitration system. In recent years, however, trust among merchants has eroded, and merchants have correspondingly lost confidence in the industry’s arbitration. This article describes the events that have led to the breakdown of cooperative trust in the industry and derives lessons regarding the nature and limits of reputation-based exchange in the modern economy.

An Autopsy of Cooperation: Diamond Dealers and the Limits of Trust-Based Exchange

Both academic and popular representations of the diamond industry describe trust-based relations that sustain trade and support the industry’s private arbitration system. In recent years, however, trust among merchants has eroded, and merchants have correspondingly lost confidence in the industry’s arbitration. This article describes the events that have led to the breakdown of cooperative trust in the industry and derives lessons regarding the nature and limits of reputation-based exchange in the modern economy.

The Problem with All-or-Nothing Trust Games: What Others Choose Not to Do Matters in Trust-Based Exchange

Many economic interactions are characterized by “all-or-nothing” action spaces that may limit the demonstrability of intended trust. We investigate whether restricting investment opportunities to all-or-nothing options affects the investment rate and propensity to reciprocate. We do this by manipulating the investor’s action space in two versions of the trust game. In the all-or-nothing game the investor can invest either $10 (all) or $0 (nothing), while in the continuous game the investor can invest any amount between $10 and $0. In both games, the trustee receives the tripled investment and then can return any amount to the investor. Results indicate that investments are higher in the all-or-nothing game than in the continuous game. However, higher investments in the all-or-nothing game do not lead to higher returns. To the contrary, conditional on $10 investments, on average trustees return less in the all-or-nothing game. Although the all-or-nothing action space results in greater wealth overall, it also appears to “backfire” for investors who do not benefit from the increased wealth. These results support the proposition that humans perceive intentions not only by evaluating what others do but also by evaluating what others choose not to do.

Restoring Damaged Trust with Promises, Atonement and Apology

In an experiment using two consecutive trust games, we study how “cheap” signals such as promises and messages are used to restore damaged trust and encourage new trust where it did not previously exist. In these games, trustees made non-binding promises of investment-contingent returns, then investors decided whether to invest, and finally trustees decided how much to return. After an unexpected second game was announced, but before it commenced, trustees could send a one-way message. This naturalistic quasi-experimental design allowed us to observe the endogenous emergence of trust-relevant behaviors and focus on naturally occurring remedial strategies used by promise-breakers and distrusted trustees, their effects on investors, and subsequent outcomes. In the first game 16.6% of trustees were distrusted and 18.8% of trusted trustees broke promises. Trustees distrusted in the first game used promises closer to equal splits and messaging to encourage trust in the second game. To restore damaged trust, promise-breakers used larger new promises (signals of intended atonement) and messaging (usually with apology). On average, investments in each game paid off for investors and trustees, suggesting that cheap signals foster profitable trust-based exchanges in these economic games.

Willingness to believe and betrayal aversion: the special role of trust in art exchanges

Lack of transparency is considered a major functional deficiency of art markets. The uniqueness of artworks, the subjectivity of the pleasure component in their appeal, the unequal access to verifiable information make information asymmetries, and their potential opportunistic use, one of the dominant characteristics of this market and one that is very difficult to remedy. Yet, art goods are not simply risk-intensive goods, as are financial assets. Their complexity and specificity have given ample room, not only for calls for greater transparency and more credible information, but also for building trust-based long-term relationships. Drawing on the distinction between decisions involving risk and decisions involving trust, the paper discusses how relational trust, based on confidentiality and reciprocity, has helped compensate for the lack of transparency to increase the overall trustworthiness of art markets. Yet, trust-based exchanges have a downside too, since trust, once gained, can also be used opportunistically to defend and exploit positions of privilege and power. This form of strategic trust can become an obstacle to the diffusion of information and the adoption of credible norms of transparency.

Building and rebuilding trust with promises and apologies

Using trust games, we study how promises and messages are used to build new trust where it did not previously exist and to rebuild damaged trust. In these games, trustees made non-binding promises of investment-contingent returns, then investors decided whether to invest, and finally trustees decided how much to return. After an unexpected second game was announced, but before it commenced, trustees could send a one-way message. This design allowed us to observe the endogenous emergence and natural distribution of trust-relevant behaviors and focus on naturally occurring remedial strategies used by promise-breakers and distrusted trustees, their effects on investors, and subsequent outcomes. In the first game 16.6% of trustees were distrusted and 18.8% of trusted trustees broke promises. Trustees distrusted in the first game used long messages and promises closer to equal splits to encourage trust in the second game. To restore damaged trust, promise-breakers used apologies and upgraded promises. On average, investments in each game paid off for investors and trustees, suggesting that effective use of cheap signals fosters profitable trust-based exchange in these economies.

Building and Rebuilding Trust with Promises and Apologies

Using trust games, we study how promises and messages are used to build new trust where it did not previously exist and to rebuild damaged trust. In these games, trustees made non-binding promises of investment-contingent returns, then investors decided whether to invest, and finally trustees decided how much to return. After an unexpected second game was announced, but before it commenced, trustees could send a one-way message. This design allowed us to observe the endogenous emergence and natural distribution of trust-relevant behaviors and focus on naturally occurring remedial strategies used by promise-breakers and distrusted trustees, their effects on investors, and subsequent outcomes. In the first game 16.6% of trustees were distrusted and 18.8% of trusted trustees broke promises. Trustees distrusted in the first game used long messages and promises closer to equal splits to encourage trust in the second game. To restore damaged trust, promise-breakers used apologies and upgraded promises. On average, investments in each game paid off for investors and trustees, suggesting that effective use of cheap signals fosters profitable trust-based exchange in these economies.

Trust-based exchange of services to motivate cooperation in P2P networks

In this paper we propose a trust-based exchange framework to motivate cooperation among peers of different consumption, contribution and service evaluation profiles. Our framework consists of distributed resource allocation and server selection policies based on local reputation vectors. We present how proposed policies outperform previous work and lead to the autonomic formation of coalitions between peers who mutually profit by exchanging their services. In this way the utilities of all peers progressively improve without pre-existing knowledge of one another’s service evaluation and capability profiles. Peers’ coalitions are dynamically reformatted, adapting to network changes, e.g., when new peers enter the system or peers vary their profiles. Only misbehaving (non contributive) peers cannot benefit by our framework, which efficiently blocks misbehavior.

Opting out of the Legal System: Extralegal Contractual Relations in the Diamond Industry

Opting out of the Legal System: Extralegal Contractual Relations in the Diamond Industry