The Economic Reductionism and Trust (Ir)rationality - Trust Theory: A Socio-Cognitive and Computational Model - page 248

In the economic framework, first we can only account for a part of these factors; second this
account is quite incomplete and unsatisfactory. We can account only for those factors that affect
the rewards of the actor and then the probability that he will prefer one action to another. Honor,
norms, friendship, promises, etc. must be translated into positive or negative 'incentives' on
choice (for example to cooperate versus to defeat). This account is very reductive. In fact, we
do not understand in the theory how and why a belief (information) about the existence of a
given norm or control, or of a given threat, can generate a goal of G and eventually change
his preferences. Notice, on the contrary, that our predictions and our actions of influencing
are precisely based on a 'theory' like this, on a 'theory' of G 's mind and mental processes
beyond and underlying 'calculation'. Calculation is not only institutionally but also cognitively
embedded and justified!
Other important aspects seem completely left out of the theory. For example, the ability
and self-confidence of G , and the actions for improving them (for example training) and for
modifying the probability of success, or the action for acquiring information about this and
increasing the subjective estimated probability.
Trust is also about this: beliefs about G 's competence and level of ability, and his self-
confidence. And this is a very important basis for the prediction and esteem of the probability
of success or the risk of failure.
Williamson is right and wrong. As we said, actually, we would agree with him (about the
fact that one can/should eliminate the redundant, vague, and humanistic notion of 'trust'),
but if and only if it simply covers the use of subjective probability in decisions. We have
strongly argued against both this reduction and the consequent elimination. Since trust cannot
be reduced to subjective probability, and needs a much richer and more complex model (and
measure), it cannot be eliminated from economic decisions and models. Economics without
an explicit notion and theory of trust cannot understand a lot of phenomena. For example:
the real nature of the 'relational capital' (Chapter 10) and the importance of 'reputation'; that
is, the role of the specific evaluations people have about me and why I invest in/for this, and
the specific 'signals' my behavior sends out. The crucial role of trust (as positive attitude,
as evaluation, as counting on you, as taking a risk, and so on) for eliciting a reciprocation
attitude and behavior, for spreading trust, etc. (see later). The importance of trust, not only as
subjective estimation/forecast, but as act and as social relation and link. And so on. In sum,
reducing trust to subjective probability is a disservice to trust, and to economics.
8.4 Trust in Game Theory: From Opportunism to Reciprocity
Doubtless the most important tradition of studies on trust is the 'strategic' tradition, which
builds upon the rational decision and Game Theories ((Luce and Raiffa, 1957) (Axelrod and
Hamilton, 1981), (Shoham and Leyton-Brown, 2009)) to provide us a theory of trust in conflict
resolution, diplomacy, etc. and also in commerce, agency, and in general in economy.
Let us start with our criticism of trust defined in terms of risk due to Y 's temptation and
opportunism; and as an irrational move in a strategic game. Then we will consider why (the act
of) trust cannot be mixed up and identified with the act of 'cooperating' (in strategic terms).
Finally we will discuss Trust game as a wrong model for trust; and why trust is not only and
not necessarily related to 'reciprocity'.
We will discuss two positions, one strongly relating trust and cooperation in Prisoner's or
Social Dilemma situations, and later in the so called Trust game .