The Glue of Society - Trust Theory: A Socio-Cognitive and Computational Model - page 266

9.5 Trust and Contracts

'A contract is not sufficient by itself, but is only possible because of the regulation of contracts,
which is of social origin' E. Durkheim, (the Division of Labor in Society (1893), New York: The
Free Press, 1997, p. 162).

Obviously, this social background includes trust, social conventions and trust in them, and in
people respecting them, the authorities, the laws, the contracts.

9.5.1 Do Contracts Replace Trust?
A commonplace belief in trust theory is that we put contracts in place when and because there
is no trust between the parties. Since there is no (not enough) trust, people want to be protected
by the contract. The key in these cases is not trust but the ability of some authority to enforce
contract application or to punish the violators. Analogously, in organizations people do not
rely on trust but on authorization, permission, obligations and so forth.
As we have explained in Chapter 7 (on trust and third party relationships), for us this view
is correct only if one adopts a very limited view of trust in terms of direct interaction and
acquaintance, of friendliness, etc. But it is not true that 'trust', as a general category, is not
there in contracts or in formal agreements and rules. In those cases (contracts, organizations)
we just deal with a more complex and specific kind of trust. But trust is always crucial. A third
party (and 'institutional') trust.
As we have said, we put a contract in place only because we believe that the agent will not
violate the contract, and we count on that; and this is precisely 'trust'. We base this trust in
the trustee (the belief that they will do what has been promised) either on the belief that they
are a moral person and keeps their promises, or on the belief that they worry about law and
punishment by the authorities ( A ). This expectation is the new level of X 's trust in the trustee.
As we have explained, X relies on a form of paradoxical trust of Y in A : X believes that Y
believes that A is able to control, to punish, etc. Of course, normally a contract is bilateral and
symmetric, thus the point of view of Y should be added, and his trust in X and in A when it
comes to monitoring X . Notice that Y 's beliefs about A are precisely Y 's trust in the authority
when they are the client, while, when Y is the contractor, the same beliefs are the basis of their
respect/fear toward A .
So contracts presuppose less informal/personal trust but require some more advanced (cul-
tural, institutional) form of trust, in Y, and in the institution.

9.5.2 Increasing Trust: from Intentions to Contracts
What we have just described are not only different kinds and different bases of trust. They can
also be conceived as different levels/degrees of social trust and additional supports for trust.
We mean that one basis does not necessary eliminate the other but can supplement it or replace
it when it is not sufficient. If I do not trust your personal persistence enough I can trust you
to keep your promises, and if this is not enough (or is not there) I can trust you to respect the
laws or to worry about punishments.