How do we even trust? A critique of economic approaches on trust formation

Abstract

The aim of this paper is to provide a review of trust formation models in early economic accounts and behavioral accounts of trust. Drawing on foundational theories of trust across several disciplines in the social sciences and empirical studies, I critically examine their assumptions and implications to identify the theoretical and conceptual gaps within each approach. I argue that neither approach explains successfully trust formation in interactions between individuals, due to a lack of clarity and robustness in defining trustworthiness and inadequately accounting for the role of trustworthiness expectations. Beliefs about others’ trustworthiness are central to trust. A robust account of trust formation must explain how we form such beliefs. To this end, this paper outlines an epistemological account of trust formation, meant to provide a more cohesive understanding of trust dynamics at the individual level.