What is Trust?
In behavioral economics, trust is studied as a measurable willingness to accept vulnerability based on positive expectations about another party’s intentions. It is not merely an attitude but a behavior that can be quantified through economic games.
How it works
The trust game (Berg, Dickhaut, and McCabe, 1995) shows that senders typically transfer 40-60% of their endowment to an anonymous stranger, even knowing the stranger could keep everything. Recipients usually return enough to make trusting profitable. Trust is higher in societies with stronger institutions, lower corruption, and more social capital.
Applied example
An online marketplace that introduces buyer protection and seller ratings sees transaction volumes increase dramatically, because the institutional mechanisms substitute for personal trust between strangers, reducing the perceived risk of exchange.
Why it matters
Trust is the lubricant of economic exchange. Understanding what builds and destroys it helps explain why some economies grow faster than others and why platform design must deliberately engineer trustworthiness signals.
