Trust as belief or behavior?

Despite its proposed importance for economic performance, there seems to be little agreement on what trust really is. In economics, trust is generally viewed as a belief regarding the action that is to be expected from others. This contrasts with the view that trust is a way of acting. In his influential book on the nature of explanation in the social sciences, Jon Elster argues that trusting is to act with few precautions. I argue that it is possible to reconcile these seemingly conflicting views about trust. I develop a simple model of trust where both beliefs and precautions play an important role – and where Elster’s understanding of trust can be viewed as a special case.