Experimental Economics and Trust

Trust is a key component of our economy. Cars would remain unsold at the dealer’s yard. The recruitment of suitable job candidates would be much more difficult. Economists argue that contracts, enforceable by law, ought to be concluded. Yet it is acknowledged that not all details of a relationship can be put into a contract. In this domain of incomplete contracts trust and trustworthiness are required. In a series of studies experimental economists at the Max Planck Institute of Economics investigated when and why we trust, and when we return trust.