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Trust and Reciprocity

Trust and Reciprocity: Interdisciplinary Lessons for Experimental Research

Elinor Ostrom
James Walker
Copyright Date: 2003
Published by: Russell Sage Foundation
Pages: 424
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  • Book Info
    Trust and Reciprocity
    Book Description:

    Trust is essential to economic and social transactions of all kinds, from choosing a marriage partner, to taking a job, and even buying a used car. The benefits to be gained from such transactions originate in the willingness of individuals to take risks by placing trust in others to behave in cooperative and non-exploitative ways. But how do humans decide whether or not to trust someone? Using findings from evolutionary psychology, game theory, and laboratory experiments, Trust and Reciprocity examines the importance of reciprocal relationships in explaining the origins of trust and trustworthy behavior. In Part I, contributor Russell Hardin argues that before one can understand trust one must account for the conditions that make someone trustworthy. Elinor Ostrom discusses evidence that individuals achieve outcomes better than those predicted by models of game theory based on purely selfish motivations. In Part II, the book takes on the biological foundations of trust. Frans de Waal illustrates the deep evolutionary roots of trust and reciprocity with examples from the animal world, such as the way chimpanzees exchange social services like grooming and sharing. Other contributors look at the links between evolution, cognition, and behavior. Kevin McCabe examines how the human mind processes the complex commitments that reciprocal relationships require, summarizing brain imaging experiments that suggest the frontal lobe region is activated when humans try to cooperate with their fellow humans. Acknowledging the importance of game theory as a theoretical model for examining strategic relationships, in Part III the contributors tackle the question of how simple game theoretic models must be extended to explain behavior in situations involving trust and reciprocity. Reviewing a range of experimental studies, Karen Cook and Robin Cooper conclude that trust is dependent on the complex relationships between incentives and individual characteristics, and must be examined in light of the social contexts which promote or erode trust. As an example, Catherine Eckel and Rick Wilson explore how people's cues, such as facial expressions and body language, affect whether others will trust them. The divergent views in this volume are unified by the basic conviction that humans gain through the development of trusting relationships. Trust and Reciprocity advances our understanding of what makes people willing or unwilling to take the risks involved in building such relationships and why.

    eISBN: 978-1-61044-434-7
    Subjects: Political Science, Psychology, Sociology

Table of Contents

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  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. Contributors
    (pp. ix-x)
  4. Preface
    (pp. xi-xiv)

    • Chapter 1 Introduction
      (pp. 3-18)
      Elinor Ostrom and James Walker

      Imagine the following decision situation involving two individuals. Individual 1 is endowed with $10.00. She can keep the entire sum or send some part of the $10 to individual 2, an anonymous counterpart. Individual 1 knows that any money sent to individual 2 will later be tripled in value. Furthermore, individual 2 knows that he will have the option of sending back to individual 1 some part of the tripled sum of money, a sum determined by individual 2.

      Imagine that this game is to be played only once and that both individuals know that all decisions will remain completely...

    • Chapter 2 Toward a Behavioral Theory Linking Trust, Reciprocity, and Reputation
      (pp. 19-79)
      Elinor Ostrom

      A central question has overshadowed the thinking of social scientists at least since the work of Thomas Hobbes (1960 [1651]): How do communities of individuals sustain agreements that counteract individual temptations to select short-term, hedonistic actions when all parties would be better off if each party selected actions leading to higher group and individual returns? In other words, how do groups of individuals gain trust? Hobbes′s answer is that communities have to rely on an authority external to themselves to impose and enforce commands that extricate them from the traps of their own making. Hobbes considers it impossible for individuals...

    • Chapter 3 Gaming Trust
      (pp. 80-102)
      Russell Hardin

      A long-standing and substantial body of work addresses problems of cooperation under several labels, includingcollective action, prisoner′s dilemma, andsocial dilemma. Much of this work has been experimental. The forms of the games in various experiments vary enormously, but most of them are prisoner′s dilemmas involving two or more persons. The literature focuses on isolated interactions as well as on social contexts in which cooperative (or uncooperative) play evolves over many interactions. Many of the researchers conducting experimental work have recently shifted their focus from explaining cooperation to modeling and measuring trust(also see chapter 8, this volume). Although it...


    • Chapter 4 Biological Foundations of Reciprocity
      (pp. 105-127)
      Robert Kurzban

      For the past several decades, biologists have struggled with the so-called problem of altruism and the related issue of cooperation as these phenomena, at first glance, seem to be in conflict with the principles of natural selection, the cornerstone of modern evolutionary theory. The notion of reciprocity has occupied an important place in biological thought on these problems.

      Robert Trivers (1971) has given an early and classic account of the nature of the problem, based on a discussion by George Williams (1966). Trivers defines altruism as ″behavior that benefits another organism, not closely related, while being apparently detrimental to the...

    • Chapter 5 The Chimpanzee′s Service Economy: Evidence for Cognition-Based Reciprocal Exchange
      (pp. 128-144)
      Frans B. M. De Waal

      Because organisms are supposed, first of all, to look out for themselves, biology treats cooperation as a puzzle. Why do animals suffer costs to assist one another, sometimes literally giving their lives so that others may live? Should not such behavior have been weeded out by natural selection? Ever since the 1902 publication of Petr Kropotkin′sMutual Aid, the solution to this puzzle has been that one way in which the costs of helping may be offset is through return benefits. It was not until seventy years later that this ″You scratch my back, I′ll scratch yours″ principle was formalized...


    • Chapter 6 A Cognitive Theory of Reciprocal Exchange
      (pp. 147-169)
      Kevin A. McCabe

      Human reciprocity is a set of behaviors generated by a cognitive strategy that is implemented in the evolved embodied neural circuitry of the central and peripheral nervous system. This means that the study of reciprocity is conducted on at least four different levels.

      Reciprocity is studied at the behavioral level by looking at the messages agents send and inferring the behavioral rules that produce these messages. At this level, there are known to be large variations in behavior both within and between individuals. An individual′s strategy can be defined as a plan on what behavioral rule to use contingent on...

    • Chapter 7 Conflict, Interpersonal Assessment, and the Evolution of Cooperation: Simulation Results
      (pp. 170-206)
      James Hanley, John Orbell and Tomonori Morikawa

      How cooperative dispositions might have evolved among social animals has, for many years, been productively addressed within theprisoner′s dilemmaparadigm. That game captures the intuition that by cooperating, individuals can often produce more than is possible by their separate efforts and also that self-interest can lead individuals to undermine their cooperative efforts.¹ The structure is robust, with only minor elaborations necessary to show how populations can realize their cooperative opportunities. The best-known such elaboration is iteration of the game; simply requiring players to interact in a sequence of prisoner′s dilemmas can lead them to adopt cooperation-inducing strategies such as...


    • Chapter 8 Experimental Studies of Cooperation, Trust, and Social Exchange
      (pp. 209-244)
      Karen S. Cook and Robin M. Cooper

      Trust has become a central topic of discussion in the social sciences during the past decade. Francis Fukuyama (1995), Robert Putnam (1993, 2000), Niklas Luhmann (1988), and others argue that trust is an essential social lubricant; it facilitates cooperation and contributes to the maintenance of social order at the micro level as well as at the societal level. Social order might exist without trust if supported by strong institutions that ensure commitments, provide for sanctioning and monitoring, and enforce contracts (see Barber 1983; Hardin 1999; Luhmann 1988). The capacity to engage in mutually beneficial relationships based on trust and reciprocity...

    • Chapter 9 The Human Face of Game Theory: Trust and Reciprocity in Sequential Games
      (pp. 245-274)
      Catherine C. Eckel and Rick K. Wilson

      The high degree of initial cooperation among strangers is a fascinating empirical regularity. This is not to say that all individuals begin by behaving cooperatively, nor is it the case that a given individual always begins by behaving cooperatively. Humans tend to be conditional cooperators, basing their decision to cooperate on initial expectations about their counterparts. How are these expectations formed? Our view is that humans share a capacity to read one another′s intentions through a set of cues such as facial expressions, body language, and tone of voice. The ability to read intentions has evolved along with the mechanisms...

    • Chapter 10 Strategic Analysis in Games: What Information Do Players Use?
      (pp. 275-301)
      Kevin A. McCabe and Vernon L. Smith

      Although observations broadly consistent with the predictions ofnoncooperative game theoryhave been commonly observed in certain auction markets (Smith 1982), the theory has been markedly less successful in accounting for behavior in two-person interaction games between anonymous players. This condition is generally believed to favor the achievement of noncooperative outcomes by controlling for social influences and reputation formation—phenomena that have not yet been satisfactorily integrated into the structure of game theory (see, for example, Güth, Schmittberger, and Schwarze 1982; Roth et al. 1991; McCabe, Rassenti, and Smith 1996). Despite this ″loading of the dice″ in favor of noncooperation...

    • Chapter 11 Trust in Children
      (pp. 302-322)
      William T. Harbaugh, Kate Krause, Steven G. Liday Jr. and Lise Vesterlund

      Many trade relationships are not covered by complete contracts. Although the involved parties may prefer a legally binding agreement, it is often too costly to construct a contract that fully accounts for the possible contingencies of the relationship. Absent such contracts, otherwise advantageous trades may be expected to fail as the parties each choose their payoff-maximizing actions.

      Many real-world examples demonstrate that this need not be the case. In particular, there is substantial evidence that we instead rely on a set of social contracts, whereby we trust that others will fulfill their part of a nonbinding agreement and abide by...

    • Chapter 12 Trust in Two-Person Games: Game Structures and Linkages
      (pp. 323-351)
      T. K. Ahn, Elinor Ostrom, David Schmidt and James Walker

      Contrast the following decision situation with the one described in the first chapter of this volume. Two individuals face the following choice. They are each endowed with $5. If individual 1 gives her $5 to individual 2, individual 2 receives $10. Similarly, if individual 2 gives his $5 to individual 1, individual 1 receives $10. Thus if both individuals give up their own $5, each receives a payoff of $10. If neither individual gives up $5, they both get to keep their own $5 and will receive nothing more. Of course, if one individual gives up $5 and the other...

    • Chapter 13 Cross-Societal Experimentation on Trust: A Comparison of the United States and Japan
      (pp. 352-370)
      Toshio Yamagishi

      It is generally believed that Japanese society and, in particular, business relations in Japan are characterized by a high level of trust. Collectivist preferences for in-group harmony and mutually cooperative practices in Japan are believed to underlie the high level of general trust, particularly in contrast with the individualistic and competitive pursuit of private as against collective goals in American society. At the same time, insightful social observers such as Alexis de Tocqueville (1945 [1835–40]) and Francis Fukuyama (1995) have characterized American society as having a high level of general trust. Fukuyama argues that strong family ties in societies...


    • Chapter 14 The Transformation of a Skeptic: What Nonexperimentalists Can Learn from Experimentalists
      (pp. 373-380)
      Margaret Levi

      Reading through this collection of papers for the purpose of writing a concluding note on ″what social scientists can learn″ has proved a daunting task. My own work is in historical and comparative political economy. My role in the scholarly division of labor is to reveal the micro foundations of macro events and outcomes that are often unique and then to provide the link between the micro and the macro. Even in the finest comparative research, the capacity to control for the diversity of independent variables and multiple motivations is at best limited and, more often, hopeless; it is certainly...

    • Chapter 15 Conclusion
      (pp. 381-388)
      James Walker and Elinor Ostrom

      A central question lies at the core of the social sciences: How do individuals form and sustain agreements or relationships with others to counteract individual temptations to select actions based only on short-sighted, individual incentives? In other words, how do individuals trust one another and behave in a trustworthy manner? Thomas Hobbes′s answer was that communities have to rely on an external authority to impose and enforce their own agreements with one another. Furthermore, to overcome incentives to free ride, there must be a central authority that directs ″involuntary contributions″ so as to finance the provision of the large number...

  10. Glossary
    (pp. 389-394)
  11. Index
    (pp. 395-410)