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==Economics==
{{see also|Consumer confidence}}
Trust in economics is treated as an explanation for a difference between actual human behavior and the one that can be explained by the individual desire to maximize one's utility. In economic terms, trust can provide an explanation of a difference between [[Nash equilibrium]] and the observed equilibrium. Such an approach can be applied to individuals as well as societies.

{{multiple image
| width = 200
| image1 = Levels of trust are higher in more equal rich countries.jpg
| alt1 = 
| image2 = Levels of trust are higher in more equal US states.jpg
| alt2 = 
| footer = Levels of trust are higher in more [[economic inequality|equal]] rich countries and in more equal US states<ref>The Spirit Level: Why More Equal Societies Almost Always Do Better. London, Allen Lane (2009). {{ISBN|978-1-84614-039-6}} UK Paperback edition {{ISBN|978-0-14-103236-8}} (2010)</ref>
}}

Trust is important to economists for many reasons. Taking the "[[The Market for Lemons|Market for Lemons]]" transaction popularized by [[George Akerlof]] as an example,<ref>{{Cite journal|last=Akerlof|first=George A.|date=1970|title=The Market for "Lemons": Quality Uncertainty and the Market Mechanism|url=https://academic.oup.com/qje/article-lookup/doi/10.2307/1879431|journal=The Quarterly Journal of Economics|volume=84|issue=3|pages=488–500|doi=10.2307/1879431|jstor=1879431}}</ref> if a buyer of a car doesn't trust the seller to not sell a lemon, the transaction won't be entered into. The buyer won't enter into the transaction in the absence of trust, even if the product is of great value to the buyer. Trust can act as an economic lubricant, reducing the cost of transactions between parties, enabling new forms of cooperation and generally furthering business activities;<ref name="Morgan 20–38">{{cite journal|last=Morgan|first=Robert|author2=Hunt, S. |author-link2=Shelby D. Hunt |title=The Commitment-Trust Theory of Relationship Marketing|journal=The Journal of Marketing|date=July 1994|volume=58|issue=3|pages=20–38|doi=10.2307/1252308|jstor=1252308}}</ref><ref>{{cite journal|author1=Zheng, J.|author2=Roehrich, J.K.|author3=Lewis, M.A.|s2cid=207472262|date=2008|title=The dynamics of contractual and relational governance: Evidence from long-term public-private procurement arrangements|journal=Journal of Purchasing and Supply Management|volume=14 | issue = 1 |pages=43–54|url=https://www.scopus.com/record/display.url?eid=2-s2.0-41049112855&origin=inward&txGid=yXIvJQ7AsPq0YyDQfJmJLCa%3a2|doi=10.1016/j.pursup.2008.01.004}}</ref> employment and prosperity. This observation <ref>Fukuyama, F. (1996) Trust: The Social Virtues and the Creation of Prosperity, Touchstone Books.</ref> created a significant interest in considering trust as a form of [[social capital]] and has led research into closer understanding of the process of creation and distribution of such capital. It has been claimed that a higher level of social trust is positively correlated with [[economic development]]. Even though the original concept of 'high trust' and 'low trust' societies may not necessarily hold, it has been widely accepted and demonstrated that social trust benefits the economy <ref>Zak, P. J., and Knack, S. (2001) "Trust and growth". ''Economic Journal'', 111: [https://www.jstor.org/pss/2667866 295]–321.</ref> and that a low level of trust inhibits [[economic growth]]. The absence of trust restricts growth in employment, wages and profits, thus reducing the overall welfare of society.<ref>{{Cite journal|last=Pollitt|first=Michael|date=2002|title=The economics of trust, norms and networks|url=https://onlinelibrary.wiley.com/doi/abs/10.1111/1467-8608.00266|journal=Business Ethics: A European Review|language=en|volume=11|issue=2|pages=119–128|doi=10.1111/1467-8608.00266|s2cid=153788522|issn=1467-8608}}</ref>

Theoretical economical modelling<ref>{{cite journal | last1 = Braynov | first1 = S. | last2 = Sandholm | first2 = T. | year = 2002 | title = Contracting With Uncertain Level Of Trust | journal = Computational Intelligence | volume = 18 | issue = 4| pages = 501–514 | doi=10.1111/1467-8640.00200| citeseerx = 10.1.1.70.8413 | s2cid = 33473191 }}</ref> demonstrates that the optimum level of trust that a rational economic agent should exhibit in transactions is equal to the trustworthiness of the other party. Such a level of trust leads to an efficient market. Trusting less leads to the loss of economic opportunities, while trusting more leads to unnecessary vulnerabilities and potential exploitation. Economics is also interested in quantifying trust, usually in monetary terms. The level of correlation between an increase in [[profit margin]]<ref>Resnick, P.  "The value of reputation on eBay: a controlled experiment". ''Experimental Economics'', volume 9, Issue 2, Jun 2006, pp. 79–101.</ref> or a decrease in transactional costs can be used as indicators of the economic value of trust.

Economic 'trust games' are popularly used to empirically quantify trust in relationships under laboratory conditions. There are several games and game-like scenarios related to trust that have been tried, with certain preferences to those that allow the estimation of confidence in monetary terms.<ref>Keser, C. (2003) "Experimental games for the design of reputation management systems". ''IBM Systems J.'', vol. 42, no. 3.</ref> Games of trust are designed in a way such that the Nash equilibrium differs from [[Pareto efficiency|Pareto optimum]] so that no player alone can maximize his own utility by altering his selfish strategy without cooperation. Cooperating partners can also benefit. The classical version of the game of trust has been described<ref>Berg, J., Dickhaut, J., and McCabe, K. (1995) "Trust, Reciprocity, and Social History", ''Games and Economic Behavior'' 10, 122–142. [https://archive.today/20120910063904/http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6WFW-45NJFPR-14&_user=10&_coverDate=07/31/1995&_rdoc=1&_fmt=high&_orig=search&_origin=search&_sort=d&_docanchor=&view=c&_rerunOrigin=scholar.google&_acct=C000050221&_version=1&_urlVersion=0&_userid=10&md5=49474c64b2d97b84891f6009445ffd76&searchtype=a Abstract.]</ref> as an abstracted investment game, using the scenario of an investor and a broker. The investor can invest a fraction of his money, and broker can return only part of his gains. If both players follow their economical best interest, the investor should never invest and the broker will never be able to repay anything. Thus the flow of money flow, its volume and character is attributable entirely to the existence of trust. The game can be played as a once-off, or repeatedly, with the same or different sets of players to distinguish between a general propensity to trust and trust within particular relationships. Several other variants of this game exist. Reversing rules lead to the game of distrust, pre-declarations can be used to establish intentions of players,<ref>Airiau, S., and Sen, S. (2006) "Learning to Commit in Repeated Games". In: ''Proc. of the Fifth Int. Joint Conf. on Autonomous Agents and Multiagent Systems'' (AAMAS06).</ref> while alterations to the distribution of gains can be used to manipulate perception of both players. The game can be also played by several players on the closed market,<ref>Bolton, G. E., Katok, E., and Ockenfels, A. (2003) "How Effective are Electronic Reputation Mechanisms? An Experimental Investigation".</ref> with or without information about reputation.

Other interesting games are e.g. binary-choice trust games,<ref>{{cite journal | last1 = Camerer | first1 = C. | last2 = Weigelt | first2 = K. | year = 1988 | title = Experimental Tests of a Sequential Equilibrium Reputation Model | journal = Econometrica | volume = 56 | issue = 1| pages = 1–36 | doi=10.2307/1911840| citeseerx = 10.1.1.458.4383 | jstor = 1911840 }}</ref> the gift-exchange game<ref>Fehr, E., Kirchsteiger, G., and Riedl, A.. "Does Fairness Prevent Market Clearing? An Experimental Investigation". ''Quarterly Journal of Economics'' 108 (May 1993), pp. 437–460.</ref> and various other forms of social games. Specifically games based on the [[Prisoner's Dilemma]]<ref>Poundstone, W. (1992). ''Prisoner's Dilemma''. Doubleday, NY.</ref> are popularly used to link trust with economic utility and demonstrate the rationality behind reciprocity.

The popularization of [[e-commerce]] opened the discussion of trust in economy to new challenges while at the same time elevating the importance of trust, and desire to understand customer decision to trust.<ref>McKnight, D., H., Chervany, N. L. (2001) "Conceptualizing Trust: A Typology and E-Commerce Customer Relationships Model". ''Proc. of the 34th Hawaii Int. Conf. on System Sciences''.</ref> For example, interpersonal relationships between buyers and sellers have been disintermediated by the technology,<ref>Giddens, A. (1991) ''Modernity and Self-identity: Self and Society in the Late Modern Age''. Polity Press.</ref> and consequentially required improvement.<ref>Golbeck, J. (2008). ''Computing with Social Trust''. Springer.</ref> Websites can influence the buyer to trust the seller, regardless of the seller's actual trustworthiness (e.g.<ref>Egger, F. N. "From Interactions to Transactions: Designing the Trust Experience for Business-to-Consumer Electronic Commerce". PhD Thesis, Eindhoven University of Technology (The Netherlands).</ref>). Reputation-based systems improved on trust assessment by allowing to capture the collective perception of trustworthiness, generating significant interest in various models of reputation.<ref>Chang, E., Dillion, T., Hussain, F. K. (2006) ''Trust and Reputation for Service-Oriented Environments: Technologies for Building Business Intelligence and Consumer Confidence''. John Wiley & Sons, Ltd.</ref>

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