Trust from the Economic Perspective

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Abstract

In this chapter in Sections 2.1 to 2.4 we set out our basic approach on trust from the economic perspective, some basic definitions of trust, the idea of trust and cooperation and some relevant properties of the core concept of trust, based mainly on the rational choice approach. Secondly, in Sections 2.5 to 2.8 we analyze trust as an element within economic systems.49 The objective is to understand the role, function and conditions for the development of trust within business companies as a collective phenomenon. We choose the theoretical background from Transaction Costs Economics (TCE) to analyze the effects of trust within business organizations and to understand the possible consequences of “high-trust” and “low-trust” systems. TCE is more appropriate for our study because the theory emphasizes not the individual but the context where relationships between them occur under certain circumstances.50 Third and finally in Section 2.9, we analyze trust and institutional uncertainty.