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Trust and the Wage Relationship

In: Operating Rules in Organizations

Author

Listed:
  • Bénédicte Reynaud

    (CNRS–Cepremap)

Abstract

Unlike the other social sciences, economics did not discover the importance of trust in economic relations until relatively recently, at the end of the 1960s. Arrow (1968: 538) undoubtedly had a decisive influence on this new awareness: ‘One of the characteristics of a successful economic system is that the relations of trust and confidence between principal and agent are sufficiently strong so that the agent will not cheat even though it may be ‘rational economic behavior “to do so”.’ As soon as the first cracks appeared in the standard paradigm, when Sonnenschein (1973), Mantel (1974) and Debreu (1974) demonstrated that there was no stability in equilibrium, a space was opened up for notions such as fairness, loyalty and trust that were foreign to the discipline and hitherto unthinkable. The pendulum then swung, as it were, and interest in trust intensified.1 A fundamental line of cleavage can now be discerned between those analyses that, in essence, regard trust as a rationale characterized by calculation and self-interest and those that see it as the expression of a social and collective reality that cannot be reduced to rational calculation.

Suggested Citation

  • Bénédicte Reynaud, 2002. "Trust and the Wage Relationship," Palgrave Macmillan Books, in: Operating Rules in Organizations, chapter 1, pages 9-24, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-4039-1442-2_2
    DOI: 10.1057/9781403914422_2
    as

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