Rational choice and other accounts of trust base it in objective assessments of the risks and benefits of trusting. But rational subjects must choose in the light of what knowledge they have, and that knowledge determines their capacities for trust. This is an epistemological issue, but not at the usual level of the philosophy of knowledge. Rather, it is an issue of pragmatic rationality for a given actor. It is commonly argued that trust is inherently embedded in iterated, thick relationships. (...) But such relationships are merely one source of relevant knowledge in a street-level epistemological account. Early experience may heavily influence later capacity for trust. For example, bad experience may lead to lower levels of trust and therefore fewer opportunities for mutual gain. (shrink)

Various mechanisms are known that can stabilize trust relations. Examples are repeated interactions and credible commitments through warranties, deposits, and other kinds of ‘hostages’. Usually, these mechanisms are studied in isolation from one another. An integrated analysis is widely neglected. In this note, the effects of a ‘mix’ of mechanisms are analyzed. A simple case is offered, where a combination of repeated interactions and credible commitments can stabilize trust, while neither of the mechanisms alone can do so.

This paper brings two major research lines in current sociology together. Research on social networks has long focused primarily on network effects but meanwhile also addresses the emergence and dynamics of networks. Research on trust in social and economic relations shows that networks have effects on trust. Using game theory, we provide a simple model that allows for an integrated and simultaneous analysis of network effects on trust and for the endogenous emergence of the network. The model also allows for (...) characterizing the value of the network. We use standard assumptions on full strategic rationality. Testable implications of the model as well as model extensions are sketched. (shrink)

Each day, a countless number of items is sold through online auction sites such as eBay and Ricardo. Though abuse is being reported more and more, transactions seem to be relatively hassle free. A possible explanation for this phenomenon is that the sites’ reputation mechanisms prevent opportunistic behavior. To analyze this issue, we first summarize and extend the mechanisms that affect the probability of sale of an item and its price. We then try to replicate the results as found in (...) four recent papers on online auctions. Our analyses reveal that (1) it makes sense to differentiate between ‘power sellers’ and the less regular users, (2) there are variables that have an effect on sales that are often not controlled for, (3) one should carefully consider how reputation is operationalized, ( 4) neglecting heteroscedastidty in the data can have serious consequences, and (5) there is some support indicating that effects differ across auction sites. (shrink)

Computer-mediated interaction on the Internet provides new opportunities to examine the links between reputation, risk, and the development of trust between individuals who engage in various types of exchange. In this article, we comment on the application of experimental sociological research to different types of computer-mediated social interactions, with particular attention to the emergence of what we call ‘trust networks’ (networks of those one views as trustworthy). Drawing on the existing categorization systems that have been used in experimental social psychology, (...) we relate the various forms of computer-mediated exchange to selected findings from experimental research. We develop a simple typology based on the intersection of random versus fixed-partner social dilemma games, and repeated versus one-shot interaction situations. By crossing these two types of social dilemma games and two types of interaction situations, we show that many forms of Internet exchange can be categorized effectively into four mutually exclusive categories. The resulting classification system helps to integrate the existing research on t rust in experimental social psychology with the emerging field of computer-mediated exchange. (shrink)

Conditional cooperation of selfish and rational actors is feasible in repeated encounters. We stress an important alternative for conditional cooperation: credible commitments that can be incurred via voluntary hostage posting (in the sense of pledging a bond). Hostages may facilitate cooperation in different ways. First, they reduce incentives to behave uncooperatively. Second, by offering some compensation for losses, hostages reduce the costs of suffering from uncooperative behavior of the partner. Finally, hostages may serve as signals about characteristics of the partner (...) that are related to his opportunities and incentives to behave uncooperatively. We show that signalling hostages may have lasting effects in durable relations. (shrink)

The integration of theory and empirical research in analytical social science has always been a core topic of Analyse & Kritik. This paper focuses on how analytical theory and empirical research have moved closer to each other in sociology, using rational choice theory and game-theoretic models as well as empirical research on problematic social situations (social dilemmas, collective action problems, etc.) as an example. We try to highlight the use of complementary research designs (surveys, vignette studies, lab experiments) for testing (...) the same hypotheses. We also try to show that empirical research indicates the need for the development of more complex theoretical models. (shrink)

Successful trust-relations exist if the trustee reciprocates in accordance with his/her promises to the trustor’s unilateral cooperation. Using a parametric rational choice approach, Coleman shows that an egoist without a moral conscience may place trust in another unmoral egoist. Consequently, successful trust-relations between those actors are possible if strategic considerations play no role for individual decision-making. This paper focusses on such considerations for the emergence of those relations, given complete information (in the sense of common knowledge) of the players. Generally, (...) trust-relations are hard to establish if unmoral egoists take into account their strategic interdependence. It is shown that two different motivations of the trustee, viz., altruism and morality, may suffice to overcome the characteristic conflict between individual rationality and social efficiency in situations with strategically deciding actors. (shrink)

Sufficiently frequent interaction between partners has been identified by, a.o., Axelrod as a more-or-less sufficient condition for stable cooperation. The underlying argument is that rational cooperation is ensured if short-term benefits from opportunistic behavior are offset by the long-term costs of sanctions imposed on the culprit. In this paper, we develop a model for ‘embedded trust’ in which a trustee interacts with a number of trustors who may communicate via a social network with each other about the behavior of the (...) trustor. The analysis reconfirms the standard predictions about how the level of trust depends on the payoffs and shadow of the future. We provide new predictions both on between-network effects (“which network is more favorable for cooperation?”) and on within-network effects (“in what network position can you trust more?”). (shrink)

A summary of the philosophical literature on trust.

This article argues that immoralists do not fully enjoy autonomous agency because they are not capable of engaging in the proper form of practical reflection, which requires relating to others as having equal standing. An adequate diagnosis of the immoralist’s failure of agential authority requires a relational account of reflexivity and autonomy. This account has the distinctive merit of identifying the cost of disregarding moral obligations and of showing how immoralists may become susceptible to practical reason. The compelling quality of (...) reason should not be represented as the capacity to force them to abide by morality on pain of incoherence. Rather, its authority (and objectivity) is shown when it presents them with the prospect of a transition that makes sense for them to undertake. (shrink)

The doxastic view (DV) of trust maintains that trust essentially involves belief. In a recent paper, Arnon Keren (Citation2020) gestures toward a new objection to the view, labeled Trust’s Meno Problem (TMP), which calls into question the DV’s ability to explain the widely held intuition that trust has distinct and indispensable value. As of yet, there has been no attempt to take up TMP on behalf of DV. This paper aims to fill precisely this lacuna. I do so in three (...) main stages. In §1 I contextualize and elucidate the problem, to which Keren gestures but does not address in detail. In §2 I disambiguate multiple possible interpretations of TMP, seeking to identify the most philosophically challenging. Finally, in §3, I argue that DV can solve even this interpretation. In order to do so, I make use ofthe highly plausible claim we find in the work of Katherine Hawley (Citation2012, 2019): that trust pays a compliment to the trustee. The payoffs of exploring the doxastic view in the context of Trust’s Meno Problem are twofold: we better understand the nature of the problem itself, and we see that the doxastic view can give a satisfying answer. (shrink)

Consultancy firms inform, advise, implement and mediate in their own interests and in the interests of their clients. We can only guess if their work is also in the interest of the public. There is no critical and systematical assessment of the behavior of consultancy firms. What roles do consultancy firms chose? And what arguments do they use? In the nineties the international consultancy firm Hill & Knowlton took on two assignments that showed a remarkable difference in the required role (...) the firm had to play. In the first role the firm acted as an impartial advocate, in the second role the firm acted as a political agent. An analysis of the argumentation for both roles shows us the familair short-sighted choice for the annual turnover at the cost of internal and external trustworthiness. In this decade consultancy firms will need to develop ethical assessments that meet more professional standards. (shrink)

Most explanations of the rational authority of testimony provide little guidance when evaluating individual pieces of testimony. In practice, however, we are remarkably sensitive to the varying epistemic credentials of testimony: extending trust when it is deserved, and withholding it when it is not. A complete account of the epistemology of testimony should, then, have something to say about when it is that testimony is trustworthy. In the typical case, to judge someone trustworthy requires judging them to be competent and (...) sincere. In this essay we develop an exchange-based account of testimony that shows how those who receive testimony are in a position to evaluate the sincerity of speakers. (shrink)

The aim of this paper is to better qualify the problem of online trust. The problem of online trust is that of evaluating whether online environments have the proper design to enable trust. This paper tries to better qualify this problem by showing that there is no unique answer, but only conditional considerations that depend on the conception of trust assumed and the features that are included in the environments themselves. In fact, the major issue concerning traditional debates surrounding online (...) trust is that those debates focus on specific definitions of trust and specific online environments. Ordinarily, a definition of trust is assumed and then environmental conditions necessary for trust are evaluated with respect to such specific definition. However, this _modus operandi_ fails to appreciate that trust is a rich concept, with a multitude of meanings and that there is still no strict consensus on which meaning shall be taken as the proper one. Moreover, the fact that online environments are constantly evolving and that new design features might be implemented in them is completely ignored. In this paper, the richness of the philosophical discussions about trust is brought into the analysis of online trust. I first provide a set of conditions that depend on the definition of trust that can be assumed and then discuss those conditions with respect to the design of online environments in order to determine whether they can enable (and under which circumstances) trust. (shrink)

The decision to trust encompasses evaluation of multiple information cues that are used by evaluators to make inference about the trustee’s qualities and capabilities. The information about the social status of the trustee firm is one of such cues available to evaluators. Yet the relationship between perceived social status of the trustee and the evaluator’s trust remains underexplored. In two experimental studies, we find a non-linear relationship between a firm’s status and the evaluator’s trust, and test theorized mechanisms that can (...) explain this relationship. The paper reveals that firms having low, middle, and high status are not only trusted differently, but are trusted for different reasons: qualities, such as perceived benevolence and integrity, mediate higher trust for middle-status firms, while trust for high-status firms is mediated by ability and integrity. The findings thus suggest that in the assessment of an organization’s trustworthiness, the relative importance of a particular virtue, such as ability, benevolence, or integrity, varies depending on the status position of that organization. (shrink)

Trust is difficult to define. Instead of doing so, I propose that the best way to understand the concept is through a genealogical account. I show how a root notion of trust arises out of some basic features of what it is for humans to live socially, in which we rely on others to act cooperatively. I explore how this concept acquires resonances of hope and threat, and how we analogically apply this in related but different contexts. The genealogical account (...) explains both why the notion has such value for us and why it is difficult to define. (shrink)

Why are people trustworthy? I argue for two theses. First, we cannot explain many socially important forms of trustworthiness solely in terms of the instrumentally rational seeking of one’s interests, in response to external sanctions or rewards. A richer psychology is required. So, second, possession of moral character is a plausible explanation of some socially important instances when people are trustworthy. I defend this conclusion against the influential account of trust as ‘encapsulated interest’, given by Russell Hardin, on which most (...) trustworthiness is explained by the interest of continuing relationship. (shrink)

This paper discusses the commitment account of assertion, according to which two necessary conditions for asserting that p are the speaker's undertaking a commitment to justify her assertion in the face of challenges and the speaker's licensing the audience to defer justificatory challenges back to her. Relying on what I call the "cancellation test," and focusing on Robert Brandom's version of the CAA, I show that the latter is wrong: it is perfectly possible to assert that p even while explicitly (...) disavowing the justificatory commitment and while refusing to issue a deferring license. Then I sketch an alternative to the CAA, the trust account of assertion, according to which speakers necessarily present themselves as trustworthy concerning p's truth whenever they assert p. I explain why this is different from undertaking a justificatory commitment, and offer some reasons for thinking that this is a more promising account. (shrink)

Social context is generally thought toinfluence how humans act. Here we argue thathumans rarely accept the context as it isgiven, but rather undertake conscious actionsto make it favourable. The example chosen isfrom northern Cameroon, where nomad herdsmeninduce the sedentary farmers to trust them, bydifferent means: creation of interpersonallinks, exhibition of good behaviours byrespecting certain norms. Trust is consideredas an element of the context, necessary forthem to perform acts that present a certainrisk. An attempt was made to translate one ofthe traditional (...) behaviours into a model,implemented in an artificial society:autonomous agents would make gifts in order tocreate an image of themselves in a group. Inthe simulations, a form of reputationstratification appears in time. One notes thatan agent can build the image it wants only ifthe part of the population that wants to beinvolved in the same dynamic is big enough. Asa conclusion, we suggest that althoughindividuals try to create consciously a contextfor their living, this is not just anindividual choice, but needs a commonbackground of rules, a context enabling contextcreation. (shrink)

Interfirm collaboration and trust are topics currently exciting research interest. The literature treats trust as a unitary concept, providing little understanding of those processes that create trust, or are employed by parties relying on trust. I suggest that two distinct forms of trust can be observed in economic exchanges: fragile trust and resilient trust. I define these kinds of trust, speculate on processes by which economic actors learn about them, and explore contexts in which they are likely to be relied (...) upon by economic actors. I conclude with a discussion of implications for practice and scholarship. (shrink)

Pettit presents a selection of essays touching upon metaphysics, philosophical psychology, and the theory of rational regulation. The first part of the book discusses the rule-following character of thought. The second considers how choice can be responsive to different sorts of factors, while still being under the control of thought. The third examines the implications of this view of choice and rationality for the normative regulation of social behavior.

This essay explores a major ethical variable in personal sales: trust. By analyzing data drawn from life insurance sales, the essay supports the thesis that the role of the agent and the exigencies of personal sales create certain antinomies of trust that compromise the sales process. As a result, trust occupies a problematic and apparently paradoxical position in the sales process. On the one hand, success in personal sales is held to depend upon trust. On the other hand, because the (...) techniques required to form trust in personal sales nullify the conditions under which trust is possible, these instruments of trust formation are self-defeating. (shrink)

Abstract:It is argued that virtuous peers in work organizations have two elements of character no matter what the nature of the goods the organization produces: loyalty to common projects for their own sake and trustworthiness. Each of these is shown to be a uniquely human attribute, an element of character that contributes to a life well lived, and a trait that leads to the flourishing of an entire work community.

Trust and monitoring are traditionally antithetical concepts. Describing trust as a property of a relationship of reliance, we introduce a theory of trust and monitoring, which uses mathematical models based on two classes of functions, including _q_-exponentials, and relates the levels of trust to the costs of monitoring. As opposed to several accounts of trust that attempt to identify the special ingredient of reliance and trust relationships, our theory characterizes trust as a quantitative property of certain relations of reliance that (...) can be quantified and expressed as a scalar quantity. Our theory is applicable to both human–human and human–artificial agent interactions, as it is agnostic with respect to the concrete realization of trustworthiness properties, and is compatible with many views differing on which properties contribute to trust and trustworthiness. Finally, as our mathematical models make the quantitative features of trust measurable, they provide empirical studies on trust with a rigorous methodology for its measurement. (shrink)

When young children confront a vast array of adults' testimonial claims, they should decide which testimony to endorse. If they are unable to immediately verify the content of testimonial assertions, children adopt or reject their informants' statements on the basis of forming trust in the sources of testimony. This kind of trust needs to be based on some underlying reasons. The rational choice theory, which currently dominates the social, cognitive, and psychological sciences, posits that trust should be formed on a (...) rational basis, as a result of probabilistic assessments and utility‐maximizing calculations. In this paper, the predictions stemming from the rational choice approach to trust are systematically compared with the empirical evidence from the field of developmental psychology on how children establish their trust in testimonial statements. The results of this comparison demonstrate an obvious inadequacy of the rational choice explanation of the emergence and development of children's testimonial trust, regardless of which form of trust rationality—weighting, threshold, or ordering—is examined. As none of the three forms of rationality of children's trust in testimony squares with the empirical data, this paper introduces a new version of trust rationality, adaptively rational trust. It explores the compatibility of the concept of adaptively rational trust with the recent empirical findings in the area of developmental psychology and addresses some avenues for future research on the rationality of testimonial trust. (shrink)

Trust is a key concept in business, particularly in electronic commerce. In order to understand online trust, one must first study trust research conducted in the offline world. The findings of such studies, dating from the 1950’s to the present, provide a foundation for online trust theory in e‐commerce. This paper provides an overview of the existing trust literature from the fields of philosophy, psychology, sociology, management, and marketing. Based on these bodies of work, online trust is briefly explored. The (...) range of topics for future research in online trust in e‐commerce is presented. (shrink)

As use of the Internet has increased, many issues of trust have arisen. Users wonder: will may privacy be protected if I provide information to this Internet vendor? Will my credit card remain secure? Should I trust that this party will deliver the goods? Will the goods be as described? These questions are not merely academic. A recent Boston Consulting Group study revealed that one out of ten consumers have ordered and paid for items online that never were delivered (Williams, (...) 2001). This year consumers filed around 11 000 complaints with the Federal Trade Commission alleging auction fraud, a figure up from the 107 lodged in 1997. It is no wonder that people are increasingly worried about whom to trust in online interactions. This paper explores the conditions under which online trust thrives and looks at examples of best and worst corporate practices. Online trust issues arise in a wide array of forums - chat rooms, news postings, e-catalogues, and retail transactions, to name a few. This paper focuses primarily on the online retail market, but the analysis applies to informational and entertainment sites as well. (shrink)

Alliances and other forms of cooperation between firms often promise great benefits, for example, by the exchange of knowledge or co-specialization of resources. At the same time, the necessary actions to realize these benefits can augment vulnerability to opportunistic behaviour of partners. In addition to formal contracts to mitigate the resulting behavioural uncertainties, often, mechanisms, such as reputation or ethical values, are suggested as important supplements. However, when it comes to assessment of a specific cooperation opportunity, it is difficult to (...) account systematically for the economic consequences of these 'softer factors'. Therefore, this paper aims to surpass mere financial analysis of chance and risk and to integrate systematically both reputation and ethical values into an economic assessment of cooperative relationships. For this purpose, we develop a theoretical framework that is based on a simple-decision model to account for reputation and ethical values of potential partners as drivers of behavioural uncertainty reduction. We also discuss how this framework can be used to assess cooperative relationships and illustrate these ideas with reference to the inter-organizational accounting practices of a large drugstore chain and its suppliers. (shrink)

Alliances and other forms of cooperation between firms often promise great benefits, for example, by the exchange of knowledge or co‐specialization of resources. At the same time, the necessary actions to realize these benefits can augment vulnerability to opportunistic behaviour of partners. In addition to formal contracts to mitigate the resulting behavioural uncertainties, often, mechanisms, such as reputation or ethical values, are suggested as important supplements. However, when it comes to assessment of a specific cooperation opportunity, it is difficult to (...) account systematically for the economic consequences of these ‘softer factors’. Therefore, this paper aims to surpass mere financial analysis of chance and risk and to integrate systematically both reputation and ethical values into an economic assessment of cooperative relationships. For this purpose, we develop a theoretical framework that is based on a simple‐decision model to account for reputation and ethical values of potential partners as drivers of behavioural uncertainty reduction. We also discuss how this framework can be used to assess cooperative relationships and illustrate these ideas with reference to the inter‐organizational accounting practices of a large drugstore chain and its suppliers. (shrink)

This paper explores the relationship between trust and household adaptation strategies for a sample of respondents in a Mexican agrarian community. In particular, we analyze how levels of personalized, generalized, and institutionalized trust shape the adaptation strategies of smallholders, and find that households characterized by low levels of generalized and institutionalized trust are less likely to be involved in a diversified livelihood strategy. Instead, they tend to continue with the traditional activity of maize production. In contrast, high levels of personalized (...) trust are associated with a livelihood strategy that focuses on cattle breeding and pasture growing. We argue that trust explains why some people more readily ‘catch up’ with opportunities created by an expanding market, while others lag behind in poverty. This paper thus seeks to contribute to the debate on the role of trust in economic actions and decision-making processes of smallholders. (shrink)

It is often taken for granted that monitoring stands in some kind of tension with trusting (e.g., Hieronymi 2008; Wanderer and Townsend 2013; Nguyen forthcoming; McMyler 2011, Castelfranchi and Falcone 2000; Frey 1993; Dasgupta 1988, Litzky et al. 2006) — especially three-place trust (i.e., A trusts B to X), but sometimes also two-place trust (i.e., A trusts B, see, e.g., Baier 1986). Using a case study involving relationship breakdown, repair, and formation, I will argue there are some ways in which (...) monitoring can be conducive to two-place trust, and to instances of three-place trust that are likely to be repeated over time—especially when previously established two-place trust has broken down. The result, I hope, is not any kind of abandoning of the important idea that monitoring can undermine trust, but an appreciation of where the conflict between monitoring and trust doesn’t lie – one from which future work will hopefully be better positioned to illuminate where exactly the conflict is. (shrink)

It is often taken for granted that monitoring stands in some kind of tension with trusting (e.g., Hieronymi 2008; Wanderer and Townsend 2013; Nguyen forthcoming; McMyler 2011, Castelfranchi and Falcone 2000; Frey 1993; Dasgupta 1988, Litzky et al. 2006) — especially three-place trust (i.e., A trusts B to X), but sometimes also two-place trust (i.e., A trusts B, see, e.g., Baier 1986). Using a case study involving relationship breakdown, repair, and formation, I will argue there are some ways in which (...) monitoring can be conducive to two-place trust, and to instances of three-place trust that are likely to be repeated over time—especially when previously established two-place trust has broken down. The result, I hope, is not any kind of abandoning of the important idea that monitoring can undermine trust, but an appreciation of where the conflict between monitoring and trust doesn’t lie – one from which future work will hopefully be better positioned to illuminate where exactly the conflict is. (shrink)

Real engines of the artificial intelligence revolution, machine learning models, and algorithms are embedded nowadays in many services and products around us. As a society, we argue it is now necessary to transition into a phronetic paradigm focused on the ethical dilemmas stemming from the conception and application of AIs to define actionable recommendations as well as normative solutions. However, both academic research and society-driven initiatives are still quite far from clearly defining a solid program of study and intervention. In (...) this contribution, we will focus on selected ethical investigations around AI by proposing an incremental model of trust that can be applied to both human-human and human-AI interactions. Starting with a quick overview of the existing accounts of trust, with special attention to Taddeo’s concept of “e-trust,” we will discuss all the components of the proposed model and the reasons to trust in human-AI interactions in an example of relevance for business organizations. We end this contribution with an analysis of the epistemic and pragmatic reasons of trust in human-AI interactions and with a discussion of kinds of normativity in trustworthiness of AIs. (shrink)

A key debate in the epistemology of testimony concerns when it is reasonable to acquire belief through accepting what a speaker says. This debate has been largely understood as the debate over how much, or little, assessment and monitoring an audience must engage in. When it is understood in this way the debate simply ignores the relationship speaker and audience can have. Interlocutors rarely adopt the detached approach to communication implied by talk of assessment and monitoring. Audiences trust speakers to (...) be truthful and demonstrate certain reactive attitudes if they are not. Trust and the accompanying willingness to these reactive attitudes can then provide speakers with a reason to be trustworthy. So through ignoring interlocutors' engagement with the communicative process, the existing debate misses the possibility that it is an audience's trusting a speaker that makes it reasonable for the audience to accept what the speaker says. (shrink)

Strong central authorities are able to effectively manage costly defection, but are unable to adequately address lesser conflicts because of limits to their ability to monitor and enforce. We argue, counterintuitively, that these limitations build cooperation and trust among subordinates: the limitations contribute to the production of order. First, limits to authority leave space for locally informed decentralized enforcement. Second, central authorities act as powerful but incompetent third parties whose threatened interventions increase incentives to cooperate and, therefore, to trust. We (...) outline the mechanisms by which a strong central authority enforces order and test their utility by considering the secondary literature on rates of conflict in strong, weak, and capricious states. We supplement this evidence, based on association, with a close examination of diverse case studies: baseball umpires, commercial contracts, and domestic disputes. By analyzing these case studies, we isolate and describe the mechanisms by which central authorities produce order in varied settings. We find that central authority may be effective, but the majority of this effectiveness derives from an indirect influence on dyadic relations rather than direct intervention. The state interacts with local communities, but each operates according to distinct logics. The particular character of their interaction produces four mechanisms useful in the production of order. We briefly explore implications for the operation of law as well as the production of generalized trust. (shrink)

We propose a construct, the Trust Triangle, that highlights three primary mechanisms that provide ex post accountability for opportunistic behavior and motivate ex ante trust in economic relationships. The mechanisms are a society’s legal and regulatory framework, market-based discipline and reputational capital, and culture, including individual ethics and social norms. The Trust Triangle provides a framework to conceptualize the relationships between trust, corporate accountability, legal liability, reputation, and culture. We use the Trust Triangle to summarize recent developments in the empirical (...) finance literature that examine how trust is formed and how trust, or its absence, affects financial markets, firm performance, and the incidence of financial fraud. To date, most studies examine only one leg of the Trust Triangle in isolation. The evidence, however, indicates that all three legs of the Trust Triangle have first-order effects on a wide range of financial outcomes and that they are interrelated. Attempts to model trust and trustworthiness that do not incorporate all three aspects of the Trust Triangle will therefore miss essential aspects of the basic economic problem of how counterparties overcome the risks of moral hazard, asymmetric information, and opportunism to engage in mutually beneficial exchange and production activities. We focus especially on culture-related mechanisms, a recently developed area in empirical finance research that has potential to influence the more established research on laws and reputation. (shrink)

In a competitive and morally imperfect world, business people are often faced with serious ethical challenges. Harboring suspicions about the ethics of others, many feel justified in engaging in less-than-ideal conduct to protect their own interests. The most sophisticated moral arguments are unlikely to counteract this behavior. We believe that this morally defensive behavior is responsible, in large part, for much undesirable deception in negotiation. Drawing on recent work in the literature of negotiations, we present some practical guidance on how (...) negotiators might build trust, establish common interests, and secure credibility for their statements, thereby promoting honesty. We also point out the types of social and institutional arrangements, many of which have become commonplace, that work to promote credibility, trust, and honesty in business dealings. Our approach is offered not only as a specific response to the problem of deception in negotiation, but as one model of how research in business ethics might offer constructive advice to practitioners. (shrink)

This paper examines the role of management's earnings preannouncements on judgments about its trustworthiness by nonprofessional investors. We predict that management's preannouncement decision and the resulting direction of the earnings surprise influence investors' ethical judgments about management's trustworthiness; these judgments, in turn, are associated with investors' other investment related judgments. We test our predictions in an experiment in which MBA students make investment-related judgments under four different preannouncement strategies. Consistent with our predictions, the results of our study show that managers' (...) preannouncement decisions are significantly associated with investors' evaluations of management's trustworthiness. Specifically, holding the size of the earnings surprise constant, we find that judgments of management's trustworthiness are damaged more following a negative as opposed to a positive earnings surprise, and the release of a preannouncement compared to when management does not issue a preannouncement. Also consistent with our predictions, we find that evaluations of management's trustworthiness are significantly and positively associated with judgments of the attractiveness of the firm's equity as an investment. Based on our findings, we encourage further research to explore whether managers understand the trust implications associated with their preannouncement decisions and the extent to which this understanding influences their disclosure decisions. (shrink)

It is argued that trust is a performative kind and that the evaluative normativity of trust is a special case of the evaluative normativity of performances generally. The view is shown to have advantages over competitor views, e.g., according to which good trusting is principally a matter of good believing (e.g., Hieronymi, 2008; McMyler, 2011), or good affect (e.g., Baier, 1986; Jones, 1996), or good conation (e.g., Holton, 1994). Moreover, the view can be easily extended to explain good (and bad) (...) distrust, where the latter is understood as aimed (narrow-scoped) forbearance from trusting. The overarching framework—which assimilates the evaluative norms of trusting (and distrusting) to performance-theoretic norms—supplies us with an entirely new lens to view traditional philosophical problems about what is involved in trusting and distrusting well and badly, and thus, places our capacity to make progress on problems in this area on a new footing. (shrink)

A widespread assumption in debates about trust and trustworthiness is that the evaluative norms of principal interest on the trustor’s side of a cooperative exchange regulate trusting attitudes and performances whereas those on the trustee’s side regulate dispositions to respond to trust. The aim here will be to highlight some unnoticed problems with this asymmetrical picture – and in particular, how it elides certain key evaluative norms on both the trustor’s and trustee’s side the satisfaction of which are critical to (...) successful cooperative exchanges – and to show that a symmetrical, ‘achievement-first’ approach to theorising about trust and trustworthiness (and their relation to each other) has important advantages by comparison. The view I develop is guided by a structural analogy with practical reasoning. Just as practical reasoning is working as it should only when there is realisation (knowledge and action) of states (belief and intention) with reverse directions of fits (mind-to-world and world-to-mind), likewise, cooperation between trustor and trustee is functioning as it should only when there is an analogous kind of realisation on both sides of the cooperative exchange – viz., when the trustor ‘matches’ her achievement in trusting (an achievement in fitting reliance to reciprocity) with the trustee’s achievement in responding to trust (an achievement in fitting reciprocity to reliance). An upshot of viewing cooperation between trustor and trustee as exhibiting achievement-theoretic structure is that we will be better positioned to subsume trustworthiness (and its cognates on the trustee’s side), like trust, under a wider suite of evaluative norms that regulate attempts, dispositions, and achievements symmetrically on both sides of a cooperative exchange, with ‘matching achievements’ as the gold standard. (shrink)

A bi-level account of trust is developed and defended, one with relevance in ethics as well as epistemology. The proposed account of trust—on which trusting is modelled within a virtue-theoretic framework as a performance-type with an aim—distinguishes between two distinct levels of trust, apt and convictive, that take us beyond previous assessments of its nature, value, and relationship to risk assessment. While Ernest Sosa (2009; 2015; 2017), in particular, has shown how a performance normativity model may be fruitfully applied to (...) belief, my objective is to apply this kind of model in a novel and principled way to trust. I conclude by outlining some of the key advantages of the performance-theoretic bi-level account of trust defended over more traditional univocal proposals. (shrink)

A bi-level account of trust is developed and defended, one with relevance in ethics as well as epistemology. The proposed account of trust—on which trusting is modelled within a virtue-theoretic framework as a performance-type with an aim—distinguishes between two distinct levels of trust, apt and convictive, that take us beyond previous assessments of its nature, value, and relationship to risk assessment. While Sosa, in particular, has shown how a performance normativity model may be fruitfully applied to belief, my objective is (...) to apply this kind of model in a novel and principled way to trust. I conclude by outlining some of the key advantages of the performance-theoretic bi-level account of trust defended over more traditional univocal proposals. (shrink)

The cause of ethical failure in organisations often can be traced to their organisational culture and the failure on the part of the leadership to actively promote ethical ideals and practices. This is true of all types of organisations, including the professions, which in recent years have experienced ongoing ethical problems. The questions naturally arise: what sort of professional culture promotes ethical behaviour? How can it be implemented by a profession and engendered in the individual professional? The answers to these (...) questions are of interest to business ethicists since the causes of ethical problems in business are often the same and the professions, as ethically challenged organisations, make useful and informative analogues for the measures to be adopted or avoided when the attempt is made to raise the ethical standards of business.Given this focus on the professions, it will be argued that the usual, direct attempts to control unethical behaviour by using codes of ethics, legislation and self-regulatory regimes, are not successful. (shrink)

This paper considers a recent U.K. legal dispute where a supplier sued a large organization, which had been a long-term customer, for breach of implied contract. It uses this case to discuss aspects of the nature of trust between organizations. The discussion encompasses a consideration of the distinction between trust and reliability; and, why the concept of blanket trust is not helpful. In conclusion, by contrasting business-to-business and personal relationships, the paper suggests that firms in their relationships with other institutions (...) should never follow an unquestioning form of strong trust. (shrink)

The paper presents a simulation of the dynamics of impersonal trust. It shows how a “trust and reciprocate” norm can emerge and stabilize in populations of conditional cooperators. The norm, or behavioral regularity, is not to be identified with a single strategy. It is instead supported by several conditional strategies that vary in the frequency and intensity of sanctions.