Understanding trust: The role of false consensus
Jeffrey V. Butler, Paola Giuliano, Luigi Guiso 18 December 2012
Trust among strangers is at the heart of well-functioning market economics. This column argues that individual trust beliefs are related to individual trustworthiness, which in turn is related to the values parents transmit to their children. It adds that if someone forms trust beliefs about unknown people by attributing to others his own trustworthiness, he is bound to make mistakes by being either too naïve or too wary.
Every day millions of people deal with others they know nothing or very little about. A Norwegian tourist buys a carpet in Casablanca. A woman in Mexico City hails a cab on the street. A person with a never-before-experienced eye pain asks an ophthalmologist for advice. In each case, individuals must form a belief about the reliability of a counterparty to decide whether to deal with this person at all.
How do individuals form beliefs about how others will behave in the absence of prior interaction? And do these initial beliefs persist in the face of evidence?
Frontiers of economic research
trust, Culture, false consensus