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The Fragility and Robustness of Trust

Author

Listed:
  • Jim Engle-Warnick

    (Nuffield College, Oxford)

  • Robert L. Slonim

    (Dept of Economics, Weatherhead School of Management, Case Western Reserve University)

Abstract

Although it is well known that trust is an important component of the fulfilment of incomplete contracts, less is known regarding how robust it is to past experiences. We present an experiment in which trust is required for transactions to occur, and nature provides a series of shocks along the path of play. Although the shocks have a short-term impact, we find that trust is surprisingly robust in the long-term. We argue that trust, through fragile in one way, is in another way more robust and stable over time than previously known. The results shed light on the resilence of economic institutions with incomplete contracts.

Suggested Citation

  • Jim Engle-Warnick & Robert L. Slonim, 2001. "The Fragility and Robustness of Trust," Economics Papers 2001-W15, Economics Group, Nuffield College, University of Oxford.
    • Handle: RePEc:nuf:econwp:0115
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    File URL: http://www.nuff.ox.ac.uk/Economics/papers/2001/w15/fragnuf.pdf
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    Cited by:

    1. Ryan Murphy & Amnon Rapoport & James Parco, 2006. "The breakdown of cooperation in iterative real-time trust dilemmas," Experimental Economics, Springer;Economic Science Association, vol. 9(2), pages 147-166, June.

    More about this item

    Keywords

    Trust; Repeated Games; Experimental Economics;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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