| Abstract: |
Interpersonal trust is a one-sided social dilemma. Building on the binary
trust game, we ask how trust and trustworthiness can evolve in a population
where partners are matched randomly and agents sometimes act as trustors and
sometimes as trustees. Trustors have the option to costly check a trustee's
last action and to condition their behavior on the signal they receive. We
show that the resulting population game admits two components of Nash
equilibria. Nevertheless, the long-run outcome of an evolutionary social
learning process modeled by the best response dynamics is unique. Even if
unconditional distrust initially abounds, the trustors' checking option leads
trustees to build a reputation for trustworthiness by honoring trust. This
invites free-riders among the trustors who save the costs of checking and
trust blindly, until it does no longer pay for trustees to behave in a
trustworthy manner. This results in cyclical convergence to a mixed
equilibrium with behavioral heterogeneity where suspicious checking and blind
trusting coexist while unconditional distrust vanishes. (author's abstract) |