Trust in triads: effects of exit, control, and learning

This paper provides theoretical background for some effects of social networks on trust. We study the implications of a model with rational actors in two settings with three actors. In the first setting, there are two trustees who are involved in transactions with one truster implying that the truster has an exit option. In the second setting, two trusters play with one trustee, which gives the trusters options for voice, i.e., complaining and informing each other about the trustee's behavior. We compare these models with a baseline model in which there is only one truster and one trustee. It turns out that the opportunities for placing and honoring trust do not change for the exit model compared to the baseline model. The opportunities for trust in the voice model differ from the baseline model only if both trusters inform each other at a rate that is high enough. Only if the possibilities for receiving information and transmitting information are large enough for both trusters, trust will increase due to the information exchange possibilities in the voice model.