Published January 1996
In this paper we show slow trust building in social relationships in a model of complete information. This model is in contrast to the asymmetric information settings in 'reputation' models of slow trust building. We look at a society of borrowers and lenders who interact over time; a borrower has a short term incentive to cheat (run away with the money). In a symmetric social equilibrium which is maximal in terms of payoff for the lender side of the population, we show that average trust builds up slowly and is non-decreasing.
Paper Number TE/1996/305: