Personal Relationships and the Evolution of Trust

Abstract:     
In this paper, an indirect evolutionary version of the game of trust is studied. A population consisting of trustworthy and exploitive players is assumed. Players are chosen randomly from the population and are matched with either strangers or players they know in order to play the game of trust. Some fundamental conditions for the evolutionary success of trust and trustworthiness are derived. The results are extended to a situation in which the trustworthy players are not aware of the competitive nature of the game. The main result is that trustworthy players will not get repelled from the population as long as they are aware of the game. Further, it is shown that the vector fields of the dynamic process are discontinuous.

Number of Pages in PDF File: 22

Keywords: trust, trustworthiness, indirect evolution, discontinuous vector fields

JEL Classification: C72, C73, D63, D64

working papers series