Adaptive build-up and breakdown of trust: An agent based computational approach

A. Gorobets, B. Nooteboom

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Abstract

This article employs Agent-Based Computational Economics (ACE) to investigate whether, and under what conditions, trust is viable in markets. The emergence and breakdown of trust is modeled in a context of multiple buyers and suppliers. Agents develop trust in a partner as a function of observed loyalty. They select partners on the basis of their trust in the partner and potential profit, with adaptive weights. On the basis of realized profits, they adapt the weight they attach to trust relative to profitability, and their own trustworthiness, modeled as a threshold of defection. Trust and loyalty turn out to be viable under fairly general conditions.
Original languageEnglish
Place of PublicationTilburg
PublisherOrganization
Number of pages25
Volume2005-39
Publication statusPublished - 2005

Publication series

NameCentER Discussion Paper
Volume2005-39

Keywords

  • Agent-based computational economics
  • Inter-firm relations
  • Transaction costs
  • Governance
  • Trust
  • Complex adaptive systems

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    Gorobets, A., & Nooteboom, B. (2005). Adaptive build-up and breakdown of trust: An agent based computational approach. (CentER Discussion Paper; Vol. 2005-39). Organization.