Uncertainty and the Economic Need for Trust

Abstract

By way of introduction I start with some known features of trust that are relevant to the present chapter. Trust pricks up its ears when expectations are disappointed. That may be due to an accident that is no-one’s fault. Expectations can be broken due to inattention, lack of commitment, lack of competence or outright cheating. One does not automatically know which cause of broken expectations is at play. There is causal ambiguity, and this is part of the uncertainty or risk of trust. Especially the cheating opportunist will claim some mishap. This implies the crucial importance of openness for trust. If something is about to go wrong, one should not hide it but inform the partner of the imminent problem, pledge help to minimize the damage, and to come up with proposals, for after the crisis, of how one will prevent such problems from occurring in the future. That is trustworthy conduct. Openness is also a crucial part of dealing with risk and uncertainty. Such openness by the trustee concerning his errors must be earned by the trustor, in extending the benefit of the doubt when something goes wrong, and give the trustee the opportunity to explain and make amends. It is also wise for the trustor to be sufficiently open about what one fears, in a relationship, to give the partner the opportunity to take measures that eliminate the fear, give assurances. I want to note in passing that I have little confidence in surveys of generalized trust, in comparison between cultures. Trust is too diverse for that. Among other things, there is the well-known distinction between competence trust and intentional trust. The first concerns the competence to act according to agreement or expectations, intentional trust concerns the intention and commitment to do so to the best of one’s competence. I give an example. Many years ago I was involved in an investigation into the trust of Dutch citizens in the police. The outcome was that they have considerable intentional trust, here trust in the integrity, incorruptibility of the police, but much less competence trust, here the competence of catching criminals. Count your blessings.