IDEAS home Printed from https://ideas.repec.org/a/kap/jmgtgv/v10y2006i3p277-306.html
   My bibliography  Save this article

Adaptive Build-up and Breakdown of Trust: An Agent Based Computational Approach

Author

Listed:
  • Alexander Gorobets
  • Bart Nooteboom

Abstract

This article employs Agent-Based Computational Economics (ACE) to investigate whether, and under what conditions, trust is viable in markets. The emergence and breakdown of trust is modeled in a context of multiple buyers and suppliers. Agents develop trust in a partner as a function of observed loyalty. They select partners on the basis of their trust in the partner and potential profit, with adaptive weights. On the basis of realized profits, they adapt the weight they attach to trust relative to profitability, and their own trustworthiness, modeled as a threshold of defection. Trust and loyalty turn out to be viable under fairly general conditions. Copyright Springer 2006

Suggested Citation

  • Alexander Gorobets & Bart Nooteboom, 2006. "Adaptive Build-up and Breakdown of Trust: An Agent Based Computational Approach," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 10(3), pages 277-306, September.
    • Handle: RePEc:kap:jmgtgv:v:10:y:2006:i:3:p:277-306
    DOI: 10.1007/s10997-006-9001-6
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s10997-006-9001-6
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10997-006-9001-6?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Tesfatsion, Leigh, 1995. "A Trade Network Game with Endogenous Partner Selection," ISU General Staff Papers 199505010700001034, Iowa State University, Department of Economics.
    2. James G. March, 1991. "Exploration and Exploitation in Organizational Learning," Organization Science, INFORMS, vol. 2(1), pages 71-87, February.
    3. Arthur, W Brian, 1993. "On Designing Economic Agents That Behave Like Human Agents," Journal of Evolutionary Economics, Springer, vol. 3(1), pages 1-22, February.
    4. Kirman, Alan P. & Vriend, Nicolaas J., 2001. "Evolving market structure: An ACE model of price dispersion and loyalty," Journal of Economic Dynamics and Control, Elsevier, vol. 25(3-4), pages 459-502, March.
    5. Wendelin Reich, 2004. "Reasoning About Other Agents: a Plea for Logic-Based Methods," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 7(4), pages 1-4.
    6. Stephen Younger, 2005. "Reciprocity, Sanctions, and the Development of Mutual Obligation in Egalitarian Societies," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 8(2), pages 1-9.
    7. Andreas Diekmann & Wojtek Przepiorka, 2005. "The Evolution of Trust and Reputation: Results from Simulation Experiments," Experimental 0508005, University Library of Munich, Germany.
    8. David Brichoux & Paul E. Johnson, 2002. "The Power of Commitment in Cooperative Social Action," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 5(3), pages 1-1.
    9. Arthur, W Brian, 1991. "Designing Economic Agents that Act Like Human Agents: A Behavioral Approach to Bounded Rationality," American Economic Review, American Economic Association, vol. 81(2), pages 353-359, May.
    10. Williamson, Oliver E, 1993. "Calculativeness, Trust, and Economic Organization," Journal of Law and Economics, University of Chicago Press, vol. 36(1), pages 453-486, April.
    11. Lane, David A, 1993. "Artificial Worlds and Economics, Part I," Journal of Evolutionary Economics, Springer, vol. 3(2), pages 89-107, May.
    12. Klos, Tomas B. & Nooteboom, Bart, 2001. "Agent-based computational transaction cost economics," Journal of Economic Dynamics and Control, Elsevier, vol. 25(3-4), pages 503-526, March.
    13. Oliver E. Williamson, 1999. "Strategy research: governance and competence perspectives," Strategic Management Journal, Wiley Blackwell, vol. 20(12), pages 1087-1108, December.
    14. Holland, John H & Miller, John H, 1991. "Artificial Adaptive Agents in Economic Theory," American Economic Review, American Economic Association, vol. 81(2), pages 365-371, May.
    15. Lane, David A, 1993. "Artificial Worlds and Economics, Part II," Journal of Evolutionary Economics, Springer, vol. 3(3), pages 177-197, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nooteboom, B., 2006. "Human Nature in the Adaptation of Trust," Other publications TiSEM 6a7897e0-90c6-4c0f-88ed-2, Tilburg University, School of Economics and Management.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nooteboom, B., 2006. "Human Nature in the Adaptation of Trust," Discussion Paper 2006-37, Tilburg University, Center for Economic Research.
    2. Klos, Tomas B. & Nooteboom, Bart, 2001. "Agent-based computational transaction cost economics," Journal of Economic Dynamics and Control, Elsevier, vol. 25(3-4), pages 503-526, March.
    3. Gorobets, A. & Nooteboom, B., 2004. "Agent based computational model of trust," ERIM Report Series Research in Management ERS-2004-108-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    4. Tomas Klos, 1999. "Governance and Matching," Computing in Economics and Finance 1999 341, Society for Computational Economics.
    5. Tesfatsion, Leigh, 1998. "Teaching Agent-Based Computational Economics to Graduate Students," ISU General Staff Papers 199807010700001043, Iowa State University, Department of Economics.
    6. repec:dgr:rugsom:99b41 is not listed on IDEAS
    7. Flaminio Squazzoni, 2010. "The impact of agent-based models in the social sciences after 15 years of incursions," History of Economic Ideas, Fabrizio Serra Editore, Pisa - Roma, vol. 18(2), pages 197-234.
    8. Tony Curson Price, 1997. "Using co-evolutionary programming to simulate strategic behaviour in markets," Levine's Working Paper Archive 588, David K. Levine.
    9. Leigh Tesfatsion, 2002. "Agent-Based Computational Economics," Computational Economics 0203001, University Library of Munich, Germany, revised 15 Aug 2002.
    10. Clemens, Christiane & Riechmann, Thomas, 1996. "Evolutionäre Optimierungsverfahren und ihr Einsatz in der ökonomischen Forschung," Hannover Economic Papers (HEP) dp-195, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    11. Sieg, Gernot, 2001. "A political business cycle with boundedly rational agents," European Journal of Political Economy, Elsevier, vol. 17(1), pages 39-52, March.
    12. Denis Phan & Stephane Pajot & Jean-Pierre Nadal, 2003. "The Monopolist's Market with Discrete Choices and Network Externality Revisited: Small-Worlds, Phase Transition and Avalanches in an ACE Framework," Computing in Economics and Finance 2003 150, Society for Computational Economics.
    13. Tesfatsion, Leigh, 1995. "How Economists Can Get Alife," Economic Reports 18196, Iowa State University, Department of Economics.
    14. Chen, Shu-Heng, 2012. "Varieties of agents in agent-based computational economics: A historical and an interdisciplinary perspective," Journal of Economic Dynamics and Control, Elsevier, vol. 36(1), pages 1-25.
    15. Schunk, Daniel, 2003. "Modeling the Use of Nonrenewable Resources Using a Genetic Algorithm," Sonderforschungsbereich 504 Publications 03-23, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
    16. Roth, Alvin E. & Erev, Ido, 1995. "Learning in extensive-form games: Experimental data and simple dynamic models in the intermediate term," Games and Economic Behavior, Elsevier, vol. 8(1), pages 164-212.
    17. Giovanni Dosi & Andrea Roventini, 2019. "More is different ... and complex! the case for agent-based macroeconomics," Journal of Evolutionary Economics, Springer, vol. 29(1), pages 1-37, March.
    18. Kimbrough, Erik O., 2011. "Heuristic learning and the discovery of specialization and exchange," Journal of Economic Dynamics and Control, Elsevier, vol. 35(4), pages 491-511, April.
    19. Gilsing, V. & Nooteboom, B., 2004. "Density and strength of ties in innovation networks: an analysis of multimedia and biotechnology," Working Papers 04.16, Eindhoven Center for Innovation Studies.
    20. Karolina Safarzyńska & Jeroen Bergh, 2010. "Evolutionary models in economics: a survey of methods and building blocks," Journal of Evolutionary Economics, Springer, vol. 20(3), pages 329-373, June.
    21. Feltovich, Nick, 1999. "Equilibrium and reinforcement learning in private-information games: An experimental study," Journal of Economic Dynamics and Control, Elsevier, vol. 23(9-10), pages 1605-1632, September.

    More about this item

    Keywords

    agent-based computational economics; complex adaptive systems; governance; inter-firm relations; transaction costs; trust; C63; L14; L22; L24; P13;
    All these keywords.

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • P13 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Cooperative Enterprises

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jmgtgv:v:10:y:2006:i:3:p:277-306. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.