Article

Evolution and Breakdown of Trust in Continuous Time

Amnon Rapoport and Ryan O. Murphy

in The Oxford Handbook of Economic Conflict Resolution

Published in print September 2012 | ISBN: 9780199730858
Published online December 2012 | | DOI: http://dx.doi.org/10.1093/oxfordhb/9780199730858.013.0014

Series: Oxford Handbooks

 Evolution and Breakdown of Trust in Continuous Time

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This article introduces the dynamic trust game and uses this new paradigm to describe how trust evolves over time. It also outlines the results of two preliminary experiments that focus on the influences of the incentive to defect, group size, and signaling on the evolvement of trust. It also proposes extensions of the basic model. The successful exercise of trust requires both prosocial preferences and the belief that other players share similar prosocial preferences. Social dilemma research shows that rates of cooperation decrease over repeated interactions. The potential opportunity cost of betrayed trust matters, group size matters, and the overall level of trust in the population decreases as the stage game it iterated changes over time. Generalizations of the basic game may be proposed to address other variables that affect the development and breakdown of trust-based cooperative behavior.

Keywords: dynamic trust game; incentive; prosocial preferences; cooperation; breakdown; basic model; group size

Article.  8111 words. 

Subjects: Economics ; Microeconomics ; Econometrics and Mathematical Economics

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