The Trust Project at Northwestern University features scholars and executives exploring Trust in videos that cover theory, research and practice. By combining multiple and diverse perspectives, The Trust Project aspires to illuminate new insights for research and management.

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How academic disciplines view Trust
The mall is a good place to see an established buyer-seller relationship.

3 Components of Trust in Buyer-Seller Relationships: A Marketer’s Perspective

Contributor / Kent Grayson
Kent Grayson Marketing Breaches,Definitions,Economic Exchange,Legal Guarantees,Mergers and Acquisitions,Regulation,Vulnerability The first thing that people think about when they think about marketing is advertising because that’s the primary way that companies communicate with customers.

And because of that, a lot of people think that if you study marketing, you probably study advertising. And there are marketing researchers who do study advertising. But there are also marketing researchers who study a lot of other things.

And a common interest that unifies all marketing researchers is not an interest in advertising but an interest in what makes economic exchange possible, an interest in the conditions that facilitate economic exchange.

By economic exchange I mean any buyer-seller relationship. So, it could be a relationship between a consumer-products firm and a shopper in a grocery store. It could be a raw-material supplier and an automobile manufacturer. It could be a client and a lawyer. It could be a lemonade stand and a neighbor.

Any buyer-seller relationship like that, marketing researchers are interested in, what factors facilitate that exchange, make it happen, make sure that the buyer and seller are happy at the end? And also, what factors might hinder that exchange?

So, among people who study marketing, there is a bunch of us who study trust. And what’s interesting about trust and trust in marketing is that trust can be broken. We can get burned by trust. And for me, one of the most interesting things is understanding how we as consumers navigate this minefield of the possibility that trust might be broken.

One of the key things that makes it possible for trust to get broken in economic exchanges is this thing called “information asymmetry.” Information asymmetry refers to the fact that buyers know more about themselves than the sellers do, and sellers know more about themselves than buyers do.

And buyers and sellers can take advantage of that information asymmetry and create conditions where they get more out of the exchange than maybe they deserve. But let’s look at information asymmetry as a problem from the buyer’s perspective to start with.

So, let’s say you go into the grocery store, and you see on the shelf a product that promises to clean your clothes if you just hang up the article of clothing and you spray it with this bottle three times. And they claim that it’s going to wash your clothes just as well as in a washing machine.

The thing is, you know that when you buy that product, you’re not going to know if it’s going to work until after you give the supermarket its money, after you drive home, and after you try it on maybe a few articles of clothing to make sure that it doesn’t fade certain clothing or stain certain clothing.

And, on the other hand, the company knows a lot more about how well it works and under what conditions it works and under what conditions it doesn’t work — because no product is perfect. And they may take advantage of that.

They may put only in the fine print that it doesn’t work on jeans or it doesn’t work on cotton, or they may create a formulation that makes it look like your clothes are clean, smell like they are clean, but it actually doesn’t clean as well as a washing machine does.

So, when you as a buyer are about to make that purchase, you have to have a level of trust in the purchase and in the person selling the product. And marketing researchers are interested in what brings you to that point of trusting the product.

Now, the really cool thing about buyer-seller relationships and information asymmetry is the fact that it goes both ways. So, the information asymmetry is a problem for sellers as well as for buyers.

One example is, when you rent out your apartment or you do an apartment share, you’re the seller in that situation, and the buyers are the people coming in to use your apartment. Now, you’re not going to know what they’re doing in your apartment. There is information asymmetry there.

They may use it in ways that you don’t want them to use it, or they may break something without you knowing — you might not find out until later. In business-to-business relationships, if you’re a supplier selling to a manufacturer, they may agree to, for example, pay you in 90 days. They do a big contract with you for a year, and they agree to pay you in 90 days.

But after you work with them for a while, you realize — they’re not actually paying you in 90 days. And they know that you’re not necessarily going to break off that relationship, and they’ve taken advantage of information asymmetry.

So, marketing researchers who study trust are interested in how buyers and sellers can think about all these questions, can navigate all these problems, to minimize these concerns about information asymmetry. And trust is one way that they can do that.

So, as you look across research that’s done by marketing researchers on trust, it comes really in two types. The first type is more psychological in orientation. This research looks at how people think or feel or attitudes towards trust, and how those attitudes towards trust influence their likelihood of exchange or keep them from wanting to exchange.

There is another group of research, or another area of research, where people take more of an economic perspective. And here, the focus is on the kinds of contracts or agreements or norms or expectations that buyers and sellers can bring to the exchange that keep people from taking advantage of information asymmetries and encourage them, or incentivize them, to live up to the expectations of the exchange.

So, what is trust? In marketing, we define trust in the way that many other disciplines define it — which is, it’s a willingness to depend on someone else to do something under conditions where they may not actually do the thing that you want them to do.

And marketers understand that willingness in terms of three dimensions — or three factors influence people’s willingness to depend on someone else to do something that they don’t necessarily have to do or they’re not required to do.

The first dimension, or the first influence, is competence, perceived competence: a belief that your exchange partner is competent to deliver the kinds of things that they’ve promised to do as part of the agreement.

The second dimension is honesty. It’s a belief that your exchange partner is going to tell the truth and keep their promises. The more you believe they’re honest, the more you trust them and the more the economic exchange is enhanced.

The last dimension of trust, or the last factor of trust, is benevolence. It’s a belief that your exchange partner will think about you at critical times in the exchange when they can use information asymmetry for their own benefit, and they’re willing to think about your needs and wants.

And they’re maybe even willing to make sacrifices because they know that making you happy in the exchange is part of making a successful exchange.

Now, these three dimensions are interrelated, but honesty and benevolence are particularly highly correlated, and it’s very hard to tease them apart because a benevolent partner is often thought to be honest, and an honest partner is often thought to be benevolent.
Judging trust and trustworthiness is important in all aspects of our lives even grocery shopping.

Differentiating Trust and Trustworthiness: A Sociologist’s Perspective

Contributor / Bruce Carruthers
Bruce Carruthers Sociology Government,Institutions and Context,Legal Guarantees,Reputation Management,Social Psychology,Vulnerability As a social scientist, I’m very interested in trust as it concerns people because really society, human cooperation, human coordination, all of the activities that we do together, really depend on trust.

And you might kind of wonder, well, trust sounds a bit like faith? You know, we’re just going to take people on faith.

And don’t we have a bunch of ways of coordinating our activity and making sure that the left hand knows what the right hand is doing, and I can figure out what’s going on vis-a-vis my employer or all the people that I interact with — and don’t we have a bunch of formal coordination devices like contracts or instructions or standard operating procedures?

Why aren’t those good enough? Why do we have to go beyond that and trust people? And there’s a couple of reasons for this. And one of them is that, as wonderful as these formal devices are, they really do have limits.

And one of the reasons is that contracts and other instructions, lists, standard operating procedures, all of these devices — they’re always incomplete; that is, the world is more complicated and unpredictable than we can anticipate.

And so, stuff will happen that will effect whatever it is you’re doing with these other people. It will have an impact on your ability to execute whatever it is you’re trying to do, and it’s not going to be in the contract what’s up.

You might think to yourself, “Well, maybe trust isn’t such an issue if we go to the marketplace.” Let’s think about markets and capitalism and self-interest and competition — maybe that’s a world in which contracts and other formal devices will be sufficient.

And once you’ve got an airtight contract, you don’t have to worry about the personal character or the trustworthiness of the people you’re dealing with, because you’ve got a good contract and you hired a good lawyer.

So, the most famous person who thought about this sphere, of course, was Adam Smith in his famous book The Wealth of Nations, which really did talk about the virtues of capitalist production and competitive markets and so forth.

And I think it’s very telling that before he wrote The Wealth of Nations, Adam Smith wrote a book on The Theory of Moral Sentiments.

And in this previous book, he posited that people are linked through strong bonds of sympathy and empathy and trust, and that on top of this, we’re able to have markets and capitalism and all that kind of fun stuff.

It was clear to me (and I think clear to Smith) that some measure of some baseline, some foundation of trust is very important even in social settings where we might think that the issue of trust can be solved or avoided.

You might want to ask, when does trust arise? I’ve talked about it as kind of ever-present — it’s all over the place. But really, there’s two elements that drive trust situations.

One of them is uncertainty, and the other is vulnerability — that is, people are uncertain about what others are going to do (they don’t know what’s going to happen in the future), and they’re vulnerable to what those other people do to the extent that their interests and those other people’s actions are intertwined.

So, the trick for dealing with a trust situation is really addressing these two key elements: either trying to deal with uncertainty by acquiring more information and learning (or trying to figure out) what is likely to happen in the future.

…Or by managing your vulnerabilities and thinking about ways to mitigate or reduce the impact (or the potential harm) that others’ actions, future actions, could have on your interests.

So, this kind of sets up a generic recipe book for how to deal with trust situations. How do people trust?

People rely on a lot of heuristics, rules of thumb, to decide who is trustworthy and who is not, and that distinction is really important because you can’t go through the world trusting everyone, and you can’t function in the world if you trust no one.

And so, what you have to do at the simplest level, is kind of put everyone into two bins: there’s people that are trustworthy; there is people who are not. And you want to be able to trust the trustworthy and avoid those who are not trustworthy

I’m going to offer a couple of distinctions that help clarify the discussion of trust. And one of them is the difference between trust and trustworthiness. And this really speaks to who is doing the trusting and who is being trusted.

One party trusts the other, and the other party may or may not be trustworthy — that is, they deserve the trust. But someone who is trustworthy may not be trusted, and someone who is trusting may end up trusting someone who is not trustworthy.

So, these two things have to be kept separate. Another distinction is the distinction between generalized and relational trust.

Generalized trust really speaks to the question of how you deal with strangers. Do you trust abstract institutions? Do you trust the average citizen that you might run into on the street?

That kind of a thing — where you’re really dealing with someone with whom you have no relationship and about whom you have no prior information. What kind of ambient or generic level of trust do you have?

Relational trust is, what happens after you start to get to know someone? What happens after you start to develop a social relationship?

You have a history together; you have contracts; you have prior transactions. That is a very particular and non-anonymous form of trust, and it is really driven by the nature of the interaction that you have with that individual.
In some instances, there are similarities between chess and the psychology of trust.

Friend or Foe? A Psychological Perspective on Trust

Contributor / Adam Waytz
Adam Waytz Psychology Definitions,Government,Healthcare,Measurement,Regulation,Reputation Management,Social Psychology,Swift Trust I’m going to be talking about trust from the perspective of psychology, neuroscience, and psychophysiology.

And in these fields and subfields, trust is studied in a fairly straightforward manner: People want to know, and researchers want to know, under what conditions do people trust each other, and what are the factors that people use to determine whether or not to trust someone?

Now, despite the straightforward manner in which trust is studied in these fields, trust is really a multifaceted concept in these fields as well.

BUMPER: Key Components of Trust

So, drawing on a definition that actually comes from outside of psychology, from McKnight and Chervany in the information sciences, we can think about trust as consisting of four different things: benevolence, integrity, competence and predictability.

Benevolence essentially means, is this person a kind person? Integrity means, is this person an ethical person?

Competence means, does this person have the ability to do what needs to be done? And finally, predictability means, does this person behave in a way that I can consistently forecast?

The key question that people want to know about in these fields is, how do people judge whether someone or another entity is friend or foe? What are the dimensions that people use in judging whether someone is trustworthy or not?

BUMPER: Neural and Hormonal Bases for Trust

Trust is also studied in the subfields of neuroscience and psychophysiology, where these fields take psychological questions and simply ask, what are the neural or hormonal or physiological underpinnings of psychological phenomena?

The basic questions that psychology, neuroscience and psychophysiology are trying to answer are essentially twofold: One is, how do people decide whether or not to trust another person? What are the characteristics of the target? What are the situational determinants that lead someone to trust another person or not?

And second, a more recent question that people have gotten really interested in these fields is, how automatic is trust? How quickly do we make the decision to trust another person?

So, one of the debates that predominates psychology is the degree to which trust truly is automatic — that is, how quickly do we judge another person as trustworthy or untrustworthy.

A second debate in this field focuses on a much more specific topic, which is the topic of, what is oxytocin’s role in guiding trust?

Oxytocin is this hormone that’s been implicated in all sorts of behaviors related to social bonding and affiliation.

And work in the early 21st century by Paul Zak and colleagues determined that administering oxytocin to people (that is, increasing people’s oxytocin) increased their willingness to trust people.

But more recent research has questioned, how much is oxytocin actually solely positive in nature? Is it really this “love drug” that people like to refer to it as?

Another questions is, how much are the studies that show the role of oxytocin and trust, how much are those studies able to replicate when administered time and time again?

BUMPER: Measuring Trust

How people measure trust and trusting behavior in psychology and neuroscience and psychophysiology is very straightforward. Often, it simply consists of asking people, “How much do you trust this person, on a one-to-seven scale where one is not at all and seven is very much?”

So, a typical study would present people with various targets — maybe targets that they are just viewing the face of, maybe targets that they’ve interacted with — and then the study would ask people, “How much do you trust this person?”

Other research uses classic economic games. There’s one game that’s known as the “investment game,” or the “trust game,” that can actually measure trusting behavior.

So, within the field of psychology and its associated fields of neuroscience and psychophysiology, the questions that we’re asking about trust are really relatively simple: How do people decide and how quickly do people decide whether or not to trust another person?

However, the way that trust can be conceptualized is incredibly multifaceted.

So, trust might mean trust in the predictability of someone, trust in the warmth or benevolence of someone, trust in the integrity of someone, or trust in the competence of someone to get things done.

How to Repair Broken Trust: An Organizational Behavior Perspective

Contributor / Cecily Cooper
Cecily Cooper Organizational Behavior Breaches,Definitions,Communication,Authenticity Organizational behavior scholars study trust repair because it’s really important to understand how to maintain trust in organizations.

Trust is a driver of many key outcomes, such as employee job performance, helping behaviors, and job attitudes.

Trust also enables the coordination and the cooperation that’s necessary to achieve both day-to-day tasks and long-term challenging goals.

The problem, however, is that trust is also very fragile and easily broken, and thus the need for its repair.

When talking about interpersonal trust repair, we’re focusing on two parties: One is the trustee, and the trustee is the transgressor. And the other is the trustor. The trustor is the focus of the repair efforts.

But what we find is that there’s no one best approach for repairing trust; it depends on the type of violation.

Bumper: How the Impact of an Apology Depends on the Dimension of Trust

And research has found a really useful distinction in comparing competence- versus integrity-related violations of trust.

So, competence and integrity are two of the three dimensions of trustworthiness.

And when we look at attribution theory, the schematic model of dispositional attribution explains to us that people interpret information about integrity and competence very differently.

And what happens is that people anchor on negative signals of integrity more so than positive and positive signals of competence more so than negative.

So, if you embezzle funds from a bank but then act in a trustworthy manner later on, people still are not likely to trust you, because they see that one indication of you stealing as being very diagnostic of who you really are.

But when it comes to competence—and I’ll use a baseball analogy here—if you hit a home run, people see you as being a home-run hitter even if you strike out afterwards.

So, people see competence-related issues as being much more changeable, whereas integrity-related issues are much more stable and enduring.

Because of this, research finds that apologies can be very effective for overcoming competence-related violations because they communicate redemption.

But apologies are not effective for overcoming integrity-related violations because they also acknowledge guilt.

And that acknowledgment of guilt is very damaging because, again, people see these integrity-related issues as being relatively stable and enduring.

Bumper: Two Categories for Trust Repair Tactics

So, what tactics can be used to repair trust? Well, for simplicity’s sake, we can think of them as falling into two categories: verbal responses and substantive responses.

And verbal responses include things such as excuses, promises, denial, different types of apologies.

And for substantive responses, research has examined acts of penance (that means taking on a personal cost), reparations (that’s paying damages to the person who was harmed), or monitoring systems (imposing a monitoring system on the person who violated trust so that they can’t transgress again).

But we can’t say that either verbal or substantive responses are more effective; it really depends on how they’re offered and under what circumstances.

The important thing is that when the response is offered, it has to signal that the person has really repented, that they are trying to change who they are. Perceived repentance is key.

The second issue is that if deception was involved, people are not likely to believe verbal responses, because they feel that if they were deceived one time, that the verbal responses are probably just mere talk.

Research also gives some indication that over time, actions might be weighted more heavily than words—so, actions might be more important than words.

An interesting caveat, though, is that research also finds that larger substantive acts are not necessarily more effective than smaller ones.

So, specifically, research that’s looked at reparations, for example—giving money to the person that was harmed—has found that a lot of times, smaller amounts of money are just as effective as larger amounts.

And again, this goes back to the importance of signaling that you’ve repented.

And so, if that small amount of money gives just as strong a signal that you’ve repented as the larger amount, then there’s actually no added benefit to giving extra amounts of money, which is pretty interesting.

But the final thing to remember is, though, that signaling repentance through either verbal or substantive responses will be much more effective after a competence-related violation rather than integrity-related violation. So, again, violation type is key.

Trust repair is still a relatively new area of study under the larger umbrella of trust research. And repair scholars are still trying to identify which responses are most effective for repairing trust and under what conditions.
How trust shapes the medical field by Raymond De Vries.

How Trust Shapes the Medical Field: A Sociologist’s Perspective

Contributor / Raymond De Vries
Raymond De Vries Bioethics Trust and Networks,Generalized Trust Trust is central to the work of bioethics. In fact, you might say bioethics is a trust check on medicine and medical research, offering advice on morally fraught issues, giving voice to patients’ moral concerns, and solving bioethical problems.

I’m a sociologist, and my field actually has a pretty unique take on bioethics. We’re less interested in finding out what’s morally right and more interested in what this new way of being moral means.

So, we want to ask, who decides what’s a moral question? Who’s empowered to solve these moral questions? Who gets to say what’s right and what’s wrong?

Bumper: What Makes the Sociological Perspective Unique

Peter Berger identifies three essential features of the sociological perspective.

First of all, sociology is a relativizing discipline; that is, we’re always interested in how ideas and behavior are situated in their social context, in their historical period, in the culture and the society in which they occur.

Secondly, sociology is a debunking discipline; that is, it never accepts the taken-for-granted explanation of the way things are.

Finally, sociology is an unrespectable discipline.

So, rather than looking for explanations of society from the powerful (from leaders, from managers), we look for stories that come from the dispossessed (from followers, from the people who are being managed).

For example, a physician’s view of trust will be much different than a patient’s view of trust

It’s important to get both of those perspectives when you’re trying to understand trust.

Bumper: Questioning the Impact of Industrialization on Trust

Sociological views of trust, then, are naturally skeptical about taken-for-granted explanations of trust. Let me illustrate.

"Sociology as a discipline was born in the 17th, 18th, and 19th centuries, and it was a period marked by rapid social change."

Industrialization, urbanization, secularization, the rise of mass democracy—all these things were changing the way people lived together.

And the early sociologists were interested in finding out how these changes were affecting the way people related to each other.

Now, the easy answer to that question was to see that these rapid changes were diminishing trust and diminishing relationships between people.

"Ferdinant Tönnies looked at these changes and lamented the disappearance of small, close, friendly, trusting societies that he referred to in German as “gemeinschaft” societies, into larger impersonal societies that he referred to as “gessellschaft” societies.

He saw these as threatening the very foundations of trust.

But Emile Durkheim, one of the founders of sociology, challenged this view. He didn’t see these changes as bringing the end of solidarity but the shift from one form of solidarity into another one.

This new form of solidarity, which he called “organic solidarity,” which was based on interdependence of people in a society characterized by division of labor. So, with the division of labor, people had to depend on each other in new ways.

Bumper: Questioning the Role of Trust in Modern Society

Let’s fast-forward about 100 years to the work of Anthony Giddens, a sociologist from the United Kingdom.

Like Durkheim, he challenged taken-for-granted ideas about the sources of trust. For example, many people think citizens in modern society are less trusting than in the good old days when people lived in small communities.

But Giddens points out that every moment of our everyday lives is characterized by trust. Every day, in innumerable ways, we have to exercise trust in our daily lives.

Well, when you go to work, when you live in your home, you are trusting an architect who designed the buildings that you’re living and working in. You’re trusting that these buildings will stay standing, that they’ll provide you with a comfortable and safe place to live.

So, Giddens makes this same point that what might look like impersonal society actually rests on a foundation of trust.

What’s interesting for us is to take a look at how this perspective, how this thinking about trust from a skeptical, contextual point of view, can be applied to looking at the field of bioethics and how trust operates in bioethics.
Negotiation Across Cultures Depends on Trust

Negotiating Across Cultures Depends on Trust: A Psychologist’s Perspective

Contributor / Jeanne Brett
Jeanne Brett Negotiations Definitions,Swift Trust,Communication,Reciprocity, Institutions and Context I study culture and negotiation strategy, and trust is a very important concept for researchers like me. We define trust pretty much the way people in other disciplines define trust—with an emphasis on benevolence and integrity.

What we find is that negotiators who trust use strategy in a way that allows them to negotiate high-quality agreements. What they do is they share a little information about their own interests and priorities and they ask for information from their counterpart about their counterpart’s interest and priorities.

Now, an interest in negotiation—that concept—refers to the reason underlying why negotiators are asking for what they want. So, it’s the reason why you’re asking for what you’re asking: why do you want that? It answers the “why” question.

Priorities refer to, what issues are more important, and what issues are less important? Negotiators who trust and share information about interests and priorities, learn about the interests and priorities of their counterpart are able to trade things off and create high-quality agreements.

But of course to do that, you have to make yourself a little vulnerable because you’re sharing information that the other party could take advantage of. And so, the key question in our research is, who trusts and why?

BUMPER: Trust across Cultures

And one answer to that question is culture. I’d like you to take a look at the chart that plots World Values Survey trust data by regions of the world.

The World Values Survey is run by a group of scholars that collect data from a representative sample of about a thousand people within a nation, ages 18 to 80.

And they come back every two or three years.

Their trust question is, “Most people could be trusted—yes or no?” And so, what you see in the chart is the percentage, averaged by nation, of people who say, “We can trust other people.”

Before we look too carefully at the data in the chart, there are two things we need to address. One is, this is a single-issue question. And behavioral scholars like myself don’t like single-issue questions; they worry about reliability.

But because we have data from these nations, collected with this exact same question over many, many different years, you can look at the reliability across time.

And when you look at the reliability of the trust question, it’s over .90 on average across time. So, the question is reliable.

The other potential threat to validity of this question is that people in different cultures interpret trust differently when they ask a question, “Can people in your culture be trusted?”

But again, scholars have looked at this question, they ask people, “What do you believe in? What do you believe trust means?” and they get consistently the same answer over and over again—integrity and benevolence.

So, if we take a look at the data, you might infer—from seeing that trust is relatively high in the West and in East Asia, and relatively low in South Asia and in the Middle East and in Latin America—that East Asians and Westerners are going to be using a lot of strategy that shares information, and people in Latin America and in the Middle East and South Asia aren’t.

And you’d only be half right.

It turns out that the research on negotiation in the West shows a lot of information sharing, a lot of cooperative behavior, but we don’t see the same thing in East Asia.

And the question again is, why?

BUMPER: Swift Trust

It turns out, in the West, negotiators seem to use something that we call “swift trust.” And the idea of swift trust was coined by some researchers, Meyerson, Weick, and Kramer.

And they were studying film crews. They looked at film crews and they said, “These are people who come together to do a highly interdependent job. They frequently don’t know each other—maybe by reputation, but they haven’t worked together in the past.

But they come together and they coalesce very rapidly and they are very cooperative. And why does that happen?” these researchers asked.
And they said, “It happens because they assume the other is a professional. They assume that the other is trustworthy.”

And as soon as you signal that you think someone else is trustworthy, that has two or three implications. One is, they would have to be a cad not to follow up and step up to your expectations of trust.

But the other is, you’re signaling something about yourself—that you’re willing to make yourself vulnerable to the other party and believe that they are trustworthy.

In negotiation research, we see very much the same thing in our North American and Northern European data. Negotiators come to the table and make the assumption that the counterpart is trustworthy.

And they then go in and ask questions, get a little information about those very important interests and priorities, offer a little information in return. And in that counterpoint–point–counterpoint, they begin to justify the assumption of trust that they made in the first place, and they begin to solidify that trust because they have behavior that they see of the other party.

BUMPER: Trust and Social Sanctions

So, let’s take a look at the data from East Asia. Consistently, in study after study, we find East Asians are extremely competitive in negotiation. And this, of course, is not what we would expect, looking at the trust data.

A really good answer to the question of why the East Asians do not seem to act in a trustworthy fashion in negotiation was given by Toshio Yamagishi, a Japanese psychologist.

He was studying social dilemmas. Now, a social dilemma is a multiparty prisoner’s dilemma. It’s a commons problem in economics.

The tension in a social dilemma is that if all the parties cooperate, everyone shares a larger piece of the pie, a larger set of resources. If, however, everyone competes, they share a smaller set of resources.

What it means is, for you, if you compete and the rest of us cooperate, you do really well, but we do very poorly. And what Yamagishi found is that his Japanese students in a social dilemma situation would cooperate as long as there were sanctions for failure to cooperate, or competition.

When he removed the sanctions, the Japanese students competed like crazy. Yamagishi then repeated his research in the United States with American students.

And he found, first of all, that the American students were much higher trusting than the Japanese were and that they would cooperate in both the situation where there were sanctions, but they would also cooperate pretty much at the same level in situations in which there were no sanctions.

So, Yamagishi explained his results by looking at Japanese society. And what he described Japanese society is a society that’s very tightly controlled by social norms, by social monitoring, and by social sanctioning.

And he said what happened then in his research is that when monitoring and sanctioning was missing, in the situation of a social dilemma, the Japanese students competed.

But he described the United States culture as much looser in terms of norms, monitoring, and sanctioning.
And he said, “Look, the Americans have an internal moral compass that directs them to be cooperative. They don’t need and don’t expect the external controls that are characteristic of the Japanese society.”

If we take a look a look again at the trust chart and look at the Middle East and South Asia and look at Latin America, we see pretty uniformly low trust. And that would predict that we would have a lot of difficulty in negotiations—not a lot of information sharing, not a lot of high-quality agreements.

There’s much more limited negotiation data in the Middle East, South Asia, and Latin America. But it shows not a lot of cooperation, not a lot of trust, at least in the Middle East and in South Asia.

But the Latin American data are more interesting. The Latin American data show much more complexity.

For example, in some data that I have from Brazil—in fact, I’ve collected data from Brazilian managers several different times over the past 10 years—I get a lot of cooperation, a lot of information sharing, and really high-quality outcomes.

In some Spanish data, we saw that when the Spanish were negotiating with each other, they weren’t sharing information and they got low-quality outcomes; compared to the US negotiators, when they’re negotiating with each other, using more information sharing, getting higher-quality outcomes. You see that difference in trust.

But what was interesting, in the next part of the data, is when the Spanish were negotiating with the Americans. And there, the Americans continued to share information, ask for information, and the Spanish started to do that too.

And they got a lot more insight about what was important, more and less important, to their counterparts, and they negotiated much better deals in the intercultural negotiations with the Americans than they did in the intracultural negotiations with other Spanish counterparts.

So, looking at all this data, my research team concluded that trust isn’t enough to explain the relationship between culture and negotiation strategy. Taking our cue from Yamagishi’s research, we turn to some more recent work in cultural psychology by Michele Gelfand.

BUMPER: Cultural Tightness and Looseness

Michele Gelfand studies a concept that she calls “cultural tightness–cultural looseness.” And it’s very similar to the way Yamagishi described Japanese culture versus American culture.

A tight culture, according to Michele Gelfand, is one where there are strong social norms, there is monitoring of social norms, there is sanctioning of failure to conform to social norms.

And maybe it would help to have a little story to explain what that might look like if you’ve never been in Japan or East Asia.

One of my executive education students said, “I’ve got a story, professor.” He said,

“My wife and I were living in Japan. I was an expat working for an American company over there. And we decided we wanted that full cultural experience, so we rented a house in a Japanese community, not an expat community.”

And he said, “Our first major challenge was figuring out how to properly sort our recyclables because it’s very strict in Japan.”

And he said, “We tried really hard to get everything in the right bag. And then the recycle truck was coming the next night, and we would put everything out where it was supposed to be. And then we would see our neighbors coming out of their homes, going through our recycle bags, resorting it so that it was correct.”

The neighbors thought it was important for the neighborhood that the recycling be done appropriately. So, here’s a very strong set of norms, monitoring, and sanctioning.

They didn’t really sanction directly this expat couple, but the expat couple was sufficiently embarrassed that they kept working on getting their recycling right.

So, Michele Gelfand and her colleagues, all around the world, collected cultural tightness–looseness data from participants—these were mostly teachers and university students.

They asked a series of questions about how culture operated, and how tight those norms were, how much sanctioning and monitoring was going on.

So, you see in this chart how those same countries fall out on cultural tightness–looseness. These are all the same nations that we show in the trust scale. And what do you see?

We see that Western culture is a loose culture (that’s no surprise), East Asian culture is a tight culture (that’s no surprise), the Middle East and South Asia are also a tight culture, but those interesting Latin Americans are a loose culture.

So, what we have in Latin America, and maybe the way to explain what we see in the negotiation data in Latin American, is that Latin Americans live in a loose culture.
That means they can’t assume on a day-in, day-out basis, they can’t predict other people’s behavior. They don’t have expectations the way the tight-culture East Asians or Middle Easterners do.

What they have to do is navigate a loose culture and navigate a low-trust, loose culture. What do they do? They certainly don’t engage in swift trust—that assumption that everyone else is trustworthy.

What they do is they build slow trust; their focus is on building relationships. And they do all the things—getting to know you as a person, learning about your family, finding commonalities in interests in sports, in interests in food—to get a relationship going with you that has nothing to do with a negotiation.

But if they can build a common path with you personally, they build a relationship to be able to negotiate cooperatively.

And so, my colleagues and I think that there’s more to culture and negotiation strategy than just trust. It’s that interface between trust and cultural tightness–looseness that accounts for how negotiators in different parts of the world use strategy.

The Most Important Ingredient in a Healthy Relationship: A Psychologist’s Perspective

Contributor / Eli Finkel
Eli Finkel Relationships Vulnerability,Reciprocity,Distrust Sometimes when we think about trust, we think about whether we’d be willing to loan 20 dollars to a friend.

When relationships researchers think about trust, we think about much higher stakes than that. We think about contexts in which our emotional well-being is fundamentally dependent upon the behavior of another person.

So, what is a close relationship? Well, Hal Kelley and his colleagues have defined the close relationship as “one characterized by strong, frequent, and diverse interdependence that lasts over a considerable period of time.”

And it turns out that if you want to predict whether people have meaningful, happy lives, the single most important factor tends to be the quality of our close relationships.

The problem is that sustaining high-quality close relationships is difficult. In particular, it requires that we’re willing to make ourselves be vulnerable to somebody who could really hurt us.

Trust is arguably the most important ingredient in a healthy close relationship—it’s the ingredient that allows us to prioritize the well-being of the relationship over the protection of the self.

When relationships researchers study trust, we tend to be especially interested in cases where the stakes are especially high—cases where, for example, we’re looking to the same person to meet the large majority of our psychological needs, our emotional needs, our monetary needs, even our co-parenting needs.

It’s scary to be vulnerable in close relationships, so early on, we tend to calibrate our level of vulnerability to our partner’s actual behavior.

Eventually, if we can establish high trust, we stop monitoring our partner’s behavior because we’re confident that he or she is willing to make sacrifices and take care of us when we need it.

2 Indicators That You Can Develop Strong Trust in a Relationship

Close relationships researchers tend to emphasize two factors in determining whether we’ll develop strong trust over time: the first is how our partner behaves in diagnostic situations, and the second is the extent to which we feel that we are worthy of being loved.

Let’s talk first about diagnostic situations. Ironically, it’s hard to develop trust in a partner unless our interests diverge from one another.

If our interests always align, we can’t know whether our partner’s nice treatment toward us results from the partner’s own preferences for him or herself versus a willingness to make sacrifices to benefit us—that is, we can’t know whether our partner’s behavior is an indicator of his or her trustworthiness.

When our interests diverge, we can witness our partner make sacrifices for us, which is indeed the central ingredient that we need in order to develop strong levels of trust.

Situations in which our interests diverge are called “diagnostic situations” because they allow us to diagnose the extent to which we can trust our partner.

A second factor that’s crucial in determining whether we can develop strong trust over time involves our trait level of insecurity.

For example, people who have relatively low self-esteem tend to feel unlovable, and consequently, they have a hard time coming to believe that their partner actually loves them.

This skepticism causes them to misperceive rejection when it’s not intended and to dismiss their partner’s expressions of affection, ultimately undermining the quality of the relationship.

Major theories of close relationships, including John Bowlby’s attachment theory, suggest that our tendencies to trust other people derives in large part from how responsive our caregivers were when we were children.

Those of us fortunate enough to have responsive caregivers develop an understanding about the world that we are loveable and that other people are reliable, and therefore, we find it easier to trust people throughout our lifetimes.

Arthur Schopenhauer considers the case of porcupines who wish to huddle together to remain warm but are concerned about getting too close because they could be stabbed by one another’s quills.

This is an excellent parable for intimacy in relationships: We can keep our distance to make sure that we’re not vulnerable to pain, but it’s pretty cold when we’re out there on our own. Or we can draw close in order to keep warm, but it’s pretty scary when we’re vulnerable.

Trust, if we can develop it, helps us resolve this porcupine dilemma by allowing us to enjoy the warmth of closeness while avoiding the perils of vulnerability.
Examining the nature of trust from a new perspective can shed important insights.

The Nature of Trust: A Philosopher’s Perspective

Contributor / Sanford Goldberg
Sanford Goldberg Philosophy Definitions,Distrust,Reciprocity,Regulation Trust is a topic that’s of great interest to philosophers. In philosophy, two subfields typically look at trust. One of them is ethics, and the other is the theory of knowledge, which is also known as “epistemology.”

The topics that philosophers look into, when they look into trust, are three: the nature of trust, the rationality of trust, and the ethics of trust. And, in this brief segment, what I thought I would do is run through all three.

When it comes to the nature of trust, philosophers are very interested in distinguishing trust from dependence and reliance. It’s a controversial issue whether trust is actually distinct from dependence or reliance, or if it’s just a type of dependence or reliance.

Most philosophers think that it’s a type of reliance, and the question is, how does it differ from mere reliance on someone?

And one of the key insights — if in fact it is an insight — of philosophers who think about trust is that trust is a kind of reliance that gives rise not merely to disappointment but to a sense of betrayal when one’s trust is violated.

And really, philosophers interested in the nature of trust ask what kind of thing is trust, such that violations of that trust yield a sense of betrayal rather than mere disappointment?

Philosophers interested in the nature of trust also are interested in the varieties of trust. And here, they distinguish between main types. The main type is what we would call “practical trust” — that’s trusting someone or some institution to do something or to be a certain way, or to refrain from doing something or to refrain from being a certain way.

The other variety of trust is what philosophers call “intellectual” or “epistemic trust,” which is the kind of trust that you have in a person or a source of information when you trust it, when you rely on it for the truth in what it tells you.

Many people think that epistemic or intellectual trust is a special case of practical trust, and that is an issue that philosophers will discuss at great length in a variety of different ways.

When it comes to the rationality of trust, we need to distinguish between two types of rationality. The first type I would call “practical rationality.” Practical rationality is the sort of rationality when it’s in your interest to do something — so, it’s rational when it’s in your interest to do something.

You might ask, when is it practically rational to trust? And here, the answer will again depend on what kind of cost-benefit analysis you do. Suppose that if you trust someone, then he or she will be your friend. That’s obviously a good thing, and that goes on the benefit side.

Suppose that you’ll have lots of friends. That makes it very, very good to trust. These are the kinds of considerations that might actually make it practically rational to trust.

But you can take a different attitude towards the rationality of trust. Suppose what you’re primarily interested in is acquiring true beliefs and avoiding false beliefs. Less interested in things like friendship or other kinds of goodies, instead you’re interested in acquiring true beliefs and avoiding false beliefs.

There, it’s clear that whether or not trusting someone will make them your friend is irrelevant to the kind of belief you want to acquire. Here, we need to talk about epistemic rationality.

What are the conditions under which trust is epistemically rational? Here, philosophers divide into two main camps. One of the camps holds that it’s rational to trust another person — so, to believe what they say — only if you have good independent reasons to regard them as trustworthy.

This view — which in philosophical circles is known as “reductionism” — holds that it’s only when you have those good reasons that it’s rational to trust someone. Those reasons can take a variety of forms.

Perhaps you know someone’s track record. They’re highly reliable, and they’ve been highly reliable in the past, so they’re likely to be reliable on this occasion. Perhaps they look sincere and competent. Those can be reasons to trust.

Other philosophers disagree. They think that you don’t need positive reasons to trust another person; what’s necessary instead is that you lack reasons to regard them as untrustworthy.

They hold, for example, that it’s rational to trust another speaker, in the same way that it’s rational to trust your own perceptual resources, when you don’t have reasons to regard the relied-upon source as untrustworthy — that is, when you don’t have reasons to think that the person with whom you’re interacting is actually unreliable or incompetent or insincere.

That view is known as “antireductionism,” and that’s the opposing view of the reductionist view about the rationality of trust.

I move on now to the final issue that philosophers explore when we think about the nature of trust, and that is the ethics of trust. I take it that it’s uncontroversial to think that we all have ethical obligations to be trustworthy.

For example, we all take it, I suppose, that you shouldn’t lie and you shouldn’t say things for which you don’t have adequate evidence. That’s not particularly controversial.

The more controversial and interesting question arises when we ask whether we have ethical obligations to trust others. Why would you think that you do have ethical obligations to trust others?

Some philosophers remind us, for example, that friendships or loving relationships can require trust on the part of the two people involved. For example, if you have a friend but don’t trust her, that may well undermine the friendship.

Or if you have a partner or a spouse and you don’t trust him, that may undermine the relationship that you have.

These philosophers use these kinds of relationships to suggest that we are sometimes under ethical obligations to trust others.

There’s one case that philosophers use to think about the question about the relationship between the ethics of trust and the rationality of trust. Take a case in which a child of yours or perhaps a very good friend is accused of a horrific crime. And he or she swears to you that he or she is innocent — not guilty as charged.

And now imagine that the evidence that’s out there is rather substantial and suggests that the person is in fact guilty. If we think that there are ethical obligations to trust our friends or our children, then we reach an interesting conclusion that it may be ethically required of us to believe something that flies in the face of the evidence.

And that is grounds for some interesting philosophical discussion.
Paola Sapienza Video How Culture Impacts Financial Markets in the Absence of Trust

Trust and Economic Prosperity: A Finance Perspective

Contributor / Paola Sapienza
Paola Sapienza Finance Generalized Trust,Economic Exchange,Rationality In 1972, Ken Arrow, Nobel Prize–winning economist, said that virtually every commercial transaction has within itself an element of trust. Indeed, he actually went on saying that it can be plausibly argued that much of the economic backwardness in the world can be explained by the lack of mutual confidence.

Since then, economists have correlated generalized trust, the concept that whether people tend to trust each other in an anonymous way with economic growth, and they found the remarkable correlation between these two variables.

It was actually, though, quite puzzling why there was such a strong correlation between the way people tend to interact in certain communities and economic prosperities.

So, economists start wondering, what is the missing link between these two variables?

One of the hypotheses postulated is that the missing link could be finance. Why? Well, in finance, a fundamental element is credit. And indeed, the word “credit” comes from ‘credere’ in Latin, which means to trust. Why is that so?

It takes a lot of trust for people to depart with their money in exchange for a promise. And this is fundamentally the way finance works.

We delegate a broker, an insurance company, a bank, we put our money in their in their hands in exchange of a future promise. And for a long time, we’re not going to see the money that we gave to them.

Now, finance is very, very important for economic prosperity. We know from years of research that without finance, allocation of resources doesn’t happen properly and economic prosperity doesn’t happen.

BUMPER: Exploring Trust through the Stock Market

Given the hypothesis postulated by economists that finance is the missing link between trust and economic prosperity, economists start investigating empirically whether indeed trust facilitated development of financial contracts in various economies.

They started studying the willingness people have to invest in the stock market.

Investment in the stock market has been one of the puzzling features in financial economics, because we know by observation that many people deliberately stay away from the stock market even when they would benefit from investing in it.

Therefore, it was reasonable to think whether, besides all the other variables that economists generally considered as determinant of investing in the stock market—such as risk aversion—trust was a big player in this decision.

Economists studied whether people that have lower generalized trust are less likely to invest their money in risky investment, such as putting their money in the stock market or even opening a checking account.

And they found a remarkable correlation between the level of generalized trust that individuals have with their willingness to invest their own money.

They also found a remarkable correlation between areas where there is a generalized low level of trust and the development of financial markets in general, suggesting that indeed this link between trust and economics could be indeed going through finance.
Trust in healthcare is especially critical when a child's health and well-being is at stake.

Trust and Vulnerability: A Pediatrician's Perspective

Contributor / Kelly Michelson
Kelly Michelson Pediatrics Definitions,Distrust,Government,Healthcare,Institutions and Context,Regulation,Reputation Management,Vulnerability Trust is really about relationships. And it can be relationships between people; it can be relationships between a person and an organization; or it can even be between people and events.

People actually have different definitions for trust, and I think it’s important to think about, what do we mean by trust? Some would call it an “action based on expectations of how others will behave in relation to yourself in the future.”

Another definition of trust that applies well in the healthcare setting is the following: “the optimistic acceptance of a vulnerable situation in which the trustor believes the trustee will care [in the] trustor’s interest.”

There are some parts of that definition worth emphasizing — in particular, this notion of “vulnerability,” that there has to be some sense of vulnerability in a trusting relationship, whether it starts from that place or develops into a vulnerable place.

So, you can imagine having a relationship with someone, and once you’re very trusting of that person, that actually can make you more vulnerable.

More commonly in the healthcare setting, though, we see a patient who because of their illness, has some inherent vulnerability, and that helps to set up a situation where trust can build.

Another important piece of this definition is this concept of motivation — the idea that, in a trusting relationship, one person is doing something caring for another person or something in another person’s best interest.

And finally, embedded within this definition is the notion that trust is a forward-looking concept. While it may be influenced by past events, it really describes how a person or organization behaves moving forward.

BUMPER: Trust and Distrust

In talking about what trust means, we also have to consider what’s meant by “distrust.” And while the jury’s kind of out about a clear definition, I think there’s some important things to talk about.

Some people would talk about distrust as the absence of trust, the lack of familiarity, sort of not having a feeling one way or another.

Another way to look at distrust is that it’s the opposite of trust, that it’s a situation where a person is pessimistic or concerned about another person’s motivations.

And finally, one can think about distrust as a substitute for trust, not necessarily the opposite of trust. So, at some level, you can have distrust and trust at the same time.

For example, maybe I get sent to an emergency room, and I feel confident about the situation because I know it’s a good emergency room. But something happens, and I sort of feel like, “Well, I’m going to hold out and reserve judgment.”

So, you can kind of share a sense of trust and distrust simultaneously — this notion about trusting, but “let me make sure that’s really the case.”

BUMPER: Trust in Individuals and Systems

When we talk about trust in health care, I think it’s important to consider it in relationship to different groups: you can have individuals, and you can have systems.

Even in this individual group, you can identify differences. So, you can have a particular one individual — a doctor or a nurse. Or you can have kind of an institution that’s an individual institution within a larger group — so, maybe one hospital within a whole healthcare system.

And then you can also look at it from a more systems perspective. And even in that context, there are more individuals and then more institutional things.

For example, maybe the group or system of how emergency doctors function or how surgeons tend to function is maybe a more systems approach — or you have how a particular institution (how hospitals work) can also be a more systems-based perspective.

The other thing to keep in mind is that relationships can be personal and they can be impersonal in the healthcare system. So, again, I use the individual doctor with their patient as a very personal relationship.

And even a patient may have a personal relationship with a hospital. You can imagine having a feeling of trust for a particular hospital and, in that way, kind of personalizing that relationship.

You may have someone who doesn’t believe in western medicine. So, even this concept of western versus non-western — this system of western medicine versus non-western medicine — is important for some patients.
Understanding trust economics can lead to breakthroughs in the market.

Trust in Transactions: An Economist's Perspective

Contributor / Niko Matouschek
Niko Matouschek Economics Economic Exchange,Economics,Legal Guarantees,Long Term Focus,Mergers and Acquisitions,Regulation,Reputation Management,Social Psychology Trust is an issue that most people don’t associate with economics, yet economists actually care a great deal about trust. And they care a great deal about trust because, in the absence of trust, many value-creating transactions simply wouldn’t take place.

To take the quintessential economic transaction as an example — if you (the buyer) don’t trust me (the seller) not to sell you a lemon, then you won’t buy from me in the first place. And you won’t buy from me even if, in principle, I could make a product that you value more than it costs me.

And so, trust matters to economists because it enables and facilitates transactions that create value and therefore are good for all of us.

Or the other way around — trust matters because the absence of trust is an impediment to growth. It’s an impediment to growth in employment, wages and profits, and therefore makes us all worse off.

To be sure, not all transactions require trust. If, for instance, you can verify on the spot whether I’m selling you a lemon or not, then our transaction doesn’t require any trust. Or, alternatively, if we can write a contract that ensures I’m not selling you a lemon, then, again, we don’t need any trust between us to transact.

The problem is that in many situations, that’s not the case. In many situations, you can’t verify on the spot whether I’m selling you a lemon or not, and writing a contract is either costly or even impossible.

And in such situations, transactions do require trust. What the economic literature on trust tries to understand is how markets function when transactions do indeed require trust.

BUMPER: Rationality and Trust: "Good Types"

To explore how markets function when transactions require trust, it’s useful to start by asking yourself when and why it’s rational for market participants to trust each other — that is, to believe that the other side is going to follow through with their promise, even if it’s not in their immediate economic interest to do so.

There are really two reasons for why it may be rational for you (the buyer) to trust me (a seller). One is that you may think that I’m what’s called a “good-type” or a “virtuous-type seller” — that is, I’m not really a coldhearted homo economicus who, at any moment in time, tries to maximize his profits.

Instead, I’m somebody who incurs, essentially, a psychic cost from not doing what I’ve said I was going to do. Even if there’s just a small number of these virtuous sellers — these virtuous sellers are in short supply, as you might think they are — they can still have significant impacts on how markets work.

One implication comes from the fact that if you’re a virtuous seller, you have a competitive advantage over regular rational ones.

If you’re known to be a virtuous seller, buyers want to transact with you. And to compete, the regular rational sellers have to create essentially contractual alternatives for trust that are both costly and typically imperfect substitutes for trust.

And so, somewhat paradoxically to being committed not to maximize your profits at any moment in time actually increases your profits. And so, being virtuous is not just good for your soul, if you want, it’s also good for your bottom line.

And that’s why virtuous sellers, or so-called virtuous sellers, can play an important role in a market, even if there’s just a small number of them.

Economic historians, for instance, sometimes argue that one of the reasons for why the Quakers played such an important role in the British economy in the 18th century is because they were known to be trustworthy.

And so, people knew that they would keep their promises, even if it were not in their immediate economic interests to do so. That put them into a competitive advantage vis-à-vis other business people and led to them playing a disproportionately important role in the economy.

BUMPER: Rationality and Trust: Good Incentives

A second implication of having virtuous sellers in the market is that if there’s uncertainty about who is who — who is virtuous and who is rational — then the rational sellers have an incentive to try to mimic the virtuous ones.

That’s going to be costly for them today because they have to forego some profit opportunities today, but then they reap the benefit of being perceived as virtuous tomorrow.

There’s a large literature on reputation games in economics, as it tries to understand the incentives, how they play out, what extent there is scope for this mimicking behavior, and how the mimicking behavior affects the functioning of markets — whether it’s overall good for the market or whether it’s bad for the market.

Now, suppose that you know that I am a coldhearted homo economicus; can it still be rational for you to trust me? And the answer is yes, provided that I care not only about today’s transaction with you but also about future transactions, either with you or with others.

In deciding whether to honor my promise to you, then, I face a trade-off. By breaking that promise today, I can make more money today, but now it comes at a cost of less future business, essentially.

As long as I care enough about the future, it is then rational for me to keep my promise to you. And since it’s rational for me to keep my promise to you, it’s rational for you to trust me in the first place.

Repeated interactions, then, can allow a coldhearted homo economicus — somebody who’s known to be a rational agent — to commit to behave as if he were a virtuous one and to do so without having to rely on any formal contracts.

Now, for that to work, two things have to be true, generally speaking: One is I, that seller — that coldhearted seller — have to care enough about the future. And two, there has to be enough transparency, in the sense that current consumers can observe enough about how I’ve treated past consumers.

And there’s a large literature on repeated games in economics that tries to understand exactly when and how these reputation mechanisms that work through repeated interaction operate.

In summary, then, there are two strands in the literature: one focuses on good types, and one focuses on good incentives. And together, they have a number of implications and shed light on a number of economic issues and phenomena.

Trust Through the Eyes of Children: A Psychologist’s Perspective

Contributor / Melissa Koenig
Melissa Koenig Human Development in Psychology Definitions,Trust Formation Children are often said to be highly trusting, or credulous, and for several reasons.

First, it’s a cherished notion, both historically and currently. It’s one of the things that adults find so charming about young children—namely, their trusting nature.

Second, don’t children have to be credulous to some degree? After all, children are in the business of acquiring an enormous amount of information about the world.

And the people around them—their family, friends, teachers, the surrounding culture—are an important source of that information.

So, they can’t afford to be skeptical about it. In this respect, trust simply makes sense.

Developmental scientists are changing people’s minds about how credulous children are by studying the different forms that trust can take, the ways in which children reason about other people—who they are, what they say, and what they do.

Bumper: Exploring Two Varieties of Trust

In thinking about varieties of trust, we can distinguish between epistemic trust and interpersonal trust.

Epistemic trust treats testimony as a species of evidence. And when treated as a species of evidence, people trust others based on the evidence they have about them.

This notion of epistemic trust is borrowed from philosophy. Philosophers have pointed to the grounds we often have for trusting others—information about the speaker or the context or a particular testimonial practice.

And when we think about epistemic trust in this way, trust is really grounded in some form of evidence.

In the field of developmental psychology, psychologists are studying epistemic trust by manipulating the evidence they present to young children.

So, you might present children with three pieces of evidence that someone’s an accurate speaker, or you might give them three pieces of evidence that someone’s pro-social or kind in their actions.

And we can ask how that evidence bears on their future trusting decisions.

There’s another type of trust that we might call “interpersonal trust”; others have called it “social trust.”

And with this form of trust, it’s not about having evidence or beliefs about a person; rather, interpersonal trust is about making a kind of decision to rely or depend on someone and doing so despite having evidence against them or having no evidence at all.

So, young children often believe what others tell them, despite their having evidence against it or having evidence against them as a speaker.

And when children trust others in this way, we think there’s other reasons or other bases of their trust in that source.

So, when children trust someone despite having evidence against them, it could be that they’re deciding to rely on someone because of other reasons or other ways we have of valuing the people around us.

One way to see this is to appreciate that even if someone provides you with false information, you might still have good interpersonal reasons to trust them.

In research by Vikram Jaswal and colleagues and Gail Heyman and others, adults are tasked with hiding a treat under one of two locations, under one of two cups, and children are invited to find the treat.

And in the task, the adult actually presents false information about where the treat is hiding. And despite these falsehoods, children continue to trust that source for information.

So, if you think of this in terms of epistemic trust, it could be that you simply need more evidence to identify a deceptive intention and discount that source.

So, this makes clear the ways in which there are two varieties of trust—the epistemic and the interpersonal.

Both of these are distinct and unique from each other, but they’re both appropriate and rational forms that trust can take.

Bumper: Three Sets of Trust Questions for Developmental Psychology

For developmental psychology, this opens up three new and really interesting sets of questions.

First, we can ask, when in development do children begin to evaluate people as sources of information? In infancy? As soon as they begin to rely on others? When they begin to understand a basic set of behavior? Or when they begin to understand what other people tell them?

Second, if children can monitor something like the accuracy of a statement, then we can ask, well, what other kinds of things are they monitoring in other people’s speech and behavior?

So, we can start to ask, what other characteristics matter to children when they’re making judgments or decisions about whether to trust another person?

And this is where research in developmental psychology draws beautifully on the work of other disciplines.

In social psychology, we know that factors like group membership, authority, and consensus factor in people’s decisions. And we can ask whether or not those same factors influence children’s reasoning about others.

And third, we can ask, in the eyes of an infant or a young child, what information makes someone worth trusting?

We can ask, what makes someone a rational agent? What makes someone a reliable agent? What makes someone a morally good agent?

And to investigate all of these questions, it makes sense to keep in mind this distinction between epistemic trust and the interpersonal.
The same way you would plug into a network server, developing trust is all about making a connection.

What Human Behavior Teaches Us About Trust: A Social Psychologist’s Perspective

Contributor / J. Keith Murnighan
J. Keith Murnighan Management Breaches,Definitions,Distrust,Government,Reciprocity,Social Psychology,Reputation Management I was trained as a social psychologist. Social psychologists pay attention to normal behavior by normal people in everyday situations and try and figure out why we do funny things the way we do.

My whole approach is about interpersonal interactions. So, I’m looking at small groups, large groups, but people interacting with each other.

Game theory is all about how rational people interact with that. My take — I love game theory because it’s just beautiful, formal, clear theories, with clear assumptions and clear outcomes and clear predictions — it wasn’t designed to be behavioral, and it didn’t include emotional.

So, my research tends to look at, do these beautiful models actually play out behaviorally? Do emotions add to our understanding of what happens and why some of those predictions don’t work?

BUMPER: Fundamental Trust Questions in the Discipline

Our research on trust, folks, is on how trust develops, what happens when there’s a breach. And those, for us, are the two biggest questions because what we’d like to see is people benefit and have efficient, effective interactions.

Game theory is like that as well; you want to maximize your outcomes. And we’d like people to actually maximize what they get in their interactions, and trust has a lot to do with that.

If you can build trust, you can interact more deeply, more effectively, and people get more out of the situation.

Anyway, recently — not that recently, 1995 — a group of three wonderful economists created what we now call the Trust Game. And the Trust Game is a simple situation where two people will interact — they can interact face to face or anonymously.

One person, often referred to as player one — we don’t use the word “trust” in our experiments because we don’t want to cue that — player one gets an endowment, say, of 10 dollars.

They have a choice of how much to send to player two. They can send anything from 0 to all the 10 dollars.

They know that however much they send is going to be tripled on its way to player two. So, if they send the whole 10, player two is going to have 30 dollars, so they’re creating more.

Player two then has a choice to return as much or as little as they want to player one.

So, the question is (this is a great game) — player one trusts; player two reciprocates — what are the factors that lead to player one trusting? What are the factors that lead to player two reciprocating?

And one of the major findings that we have found and others have found as well is that the more player one trusts, the more risks they take, the more player two reciprocates.

So, player twos have this feeling that if player ones have trusted them so much, they’re obligated.

If player one doesn’t trust them much, their obligation goes way down fast. But if they’ve been trusted a lot, obligation feelings come up, and they’re much more likely to send back a high amount.

BUMPER: Looking Forward in the Discipline

Studies of trust have proliferated. And researchers are now trying to slice and dice different kinds of trust: Is distrust the opposite of trust? Or is it something altogether separate on its own?

There’s affective trust, more of a feeling; there’s cognitive trust, where you think it out and calculate.

So, there’s debate about concepts that — for instance, one definition of trust talks about integrity, benevolence and competence.

But when we ask people who do they trust, all three come out pretty high and they overlap in ways. So, are they really separable concepts? I don’t know.

You can have trust in your head; you can have cognitive trust, affective trust, feelings that somebody has integrity.

I am impressed mostly when people behave and act as if they trust someone because, for me, everything’s about behavior. The most important things are about behavior.

Your feelings and your thoughts, yes, take up a lot of people’s time. But I want to see what’s happening in action. And certainly, from a business standpoint, that’s more important.

There are debates in the field, and there will continue to be debates. And people will niggle and nitpick. And let’s just see what people do in important situations, and I think that will be the telling factor and build more understanding.


Significant findings in the study of Trust
Paola Sapienza Video - 3 Papers Exploring Trust and Financial Transactions: Key Findings

3 Papers Exploring Trust and Financial Transactions: Key Findings

Contributor / Paola Sapienza
Paola Sapienza Finance Measurement,Generalized Trust,Economic Exchange,Distrust,Institutions and Context When economists wanted to study the relationship between trust and the existence of financial transaction and the importance of trust for financial markets, they faced an important challenge: it’s really hard to measure causal relationships in environments that are very different along many other dimensions.

So, economists decided to go to Italy. Why Italy? Well, Italy was the first place where trust was studied by sociologists.

Back in 1950, Banfield wrote a very famous book, which is called <i>The Moral Basis of a Backward Society</i>, where he identified the characteristic values, cultural values of societies where there is a very limited level of trust.

More than 40 years later, his student Robert Putnam, in 1993, wrote a very famous book called ‘Making Democracy Work’ in which he argued that social capital and trust are a necessary ingredient for democracy to work and went to Italy to study that.

Italy is a very interesting country because it’s been unified for a relatively short time—150 years. Legally, regulatory, the views are the same, so it’s the perfect setting to study trust because trust has been very different across regions.

Financial economists borrowed from the sociologists and political scientists this incredible laboratory, Italy, and decided to study the effect of different levels of generalized trust on financial contracts.

Generalized trust defines how much people trust other people they don’t know. It’s generally measured as the answer to the following question: Generally speaking, do you think you can trust other people, or you can never be too careful about it?

The answer to this question has been linked to several economic outcomes. More specifically, financial economists wondered whether there is a connection between generalized trust and finance.

BUMPER: The Relationship between Generalized Trust and Financial Contracts

In the paper, “The Role of Social Capital in Financial Contracts,” we studied the different levels of generalized trust on the availability and use of financial contracts in different regions.

We found that in areas where there is very limited social capital and very limited trust, people tend to use less of those financial contracts that we consider basic, such as writing a check, opening a bank account, investing in stock, borrowing money.

Why is that the case? Because trust is very important in these financial transactions, as it is required for people to depart with their money.

And in fact, the results show a remarkable correlation between the extensive level of generalized trust in a given area and the availability and use of those contracts in certain areas.

So, in the paper, “Trusting the Stock Market,” the link is actually closer. We look at a sample of Dutch households all living in the same countries with the same legal views but with different level of trust. It’s a representative sample of household investors.

And we ask the question whether generally speaking, they trust other people and linked the answer to this question to their financial investment.

We find that individuals that have low levels of trust are less likely to invest in the stock market. They’re also less likely to buy insurance products.

And this is a very important result in the financial literature because of the puzzle, a generalized puzzle on why some people stay away altogether from the stock market even when they would benefit from it.

The concept that is developed in this paper is very much related to an important idea in economics that if we don’t trust the rule of the game or we don’t trust the players playing the game with us, we may stay out of it altogether.

By staying out of it altogether, we’re never going to learn that indeed it’s beneficial for us to participate, and this lack of participation therefore is indeed pervasive but also persistent over time.

BUMPER: The Role of Culture in Generalized Trust

Having established that the level of generalized trust in a given area affects the use and availability of financial contracts, that the individual level of generalized trust toward others affect his willingness to invest in the stock market, a follow-up question was whether bilateral trust—so, this is a little bit more special trust.

It’s still general in the sense that it’s a trust that is applied to different groups, and it’s generally measured as how much do you trust people from France? Or how much do you trust people from this other country? Or how much do you trust people from your own country?

So, the question is still a generalized trust question but is applied to different groups. And the question the paper “Cultural Biases in Economic Exchange” tried to answer was whether this bilateral level of generalized trust affected the willingness people have to enter in specific transactions.

The results are remarkable. We find that absorbing every other bilateral characteristics like language, specificity, legal contracts, and so on, controlling for all those characteristics, the level of bilateral trust between citizens of a given country and citizens of another country affect the composition of the portfolio, the amount of trade between the two countries, and foreign direct investment.

So, we looked at whether the extent to which citizens of a given country trust citizens of another country affects the willingness to invest in stocks of that specific country, the willingness to trade with the country, and the willingness to do foreign direct investment.

We find that bilateral trust is correlated with the composition of the portfolio of mutual fund managers in the following way: The higher the level of trust between Country I and Country J, the bigger the weight of Country J’s stocks in the portfolios of Country I.

How Children Gauge Trustworthiness: Key Findings

Contributor / Melissa Koenig
Melissa Koenig Human Development in Psychology Trust Formation,Reciprocity,Swift Trust Historically in the field of developmental psychology, there’s long-standing agreement on the importance of trust and the importance of trusting relationships for children’s development and their well-being.

So, what’s new in the field? In the last 15 years or so, there’s a new interest in understanding the different forms that trust can take in children’s cognitive lives, in their learning decisions and in their practical decisions.

Bumper: How Children Develop “Epistemic Trust”—Is the Person Telling the Truth?

In development, we think epistemic judgments to trust are early emerging, that they're made spontaneously, and that children might not even need extensive evidence about you to make these judgments.

To see this, one of the first experiments that looked at children’s epistemic trust presented three- and four-year-old children with two speakers—one who consistently named a set of familiar objects accurately (say, a cup, a ball, and a shoe), and the other speaker consistently labeled those same objects inaccurately.

And after three pieces of evidence about these two speakers’ accuracy, children later preferred to learn new information from the previously accurate speaker.

Since that work on early accuracy monitoring, researchers like Kathleen Corriveau and Paul Harris have gone on to show that, A, children remember that accuracy information about individuals over time, and secondly, that they don’t only monitor an individual’s track record of accuracy, but they monitor agreement or rates of disagreement across several individuals.

So, when you think about children’s growing beliefs about religion or God, or their growing scientific beliefs about the body or the shape of the earth, we know that children need to reconcile the different claims that people are presenting about these things.

So, when people’s statements are treated as evidence, you can think of children needing to put together the different pieces of evidence they receive from other people.

To the extent that a child is surrounded by people who agree or disagree about God or dinosaurs or climate change, children can monitor people’s agreement or rates of disagreement, much like a young sociologist who samples public opinion.

So, this work on epistemic trust suggests that children are making these judgments quite flexibly.

Bumper: What Marshmallows Tell Us about Interpersonal Trust

When we’re interested in children’s interpersonal trust, it makes sense to study some of the practical decisions they make about us.

We know that children frequently face the need to wait for things that they might like right away—they have to, for example, wait for dessert until after dinner, or they have to wait to watch television until their homework is finished.

And researchers have found that children’s ability to wait for a larger reward later relates to how trustworthy or reliable the people around them prove to be.

In research by Celeste Kidd and colleagues, or Laura Michaelson and Yuko Munakata, and Annelise Pesch in my own lab have all presented children with people who make promises or commitments concerning a new and exciting art project.

Some of the people in these experiments came through on their commitments and delivered exciting art supplies, and others did not.

Later on, after the art project was put away and children were told that if they resisted a single marshmallow now in exchange for two or three marshmallows later, children were much more willing to wait for a larger reward when those claims came from people who kept their promises regarding the art supplies than when those claims came from people who made empty promises.

In research by Emily Cogsdill and colleagues, children were presented with pairs of computer-generated faces that adults had previously rated as highly trustworthy or as not very trustworthy.

And children showed great agreement, or consensus, in their own ratings and judged the faces deemed more trustworthy as nice and the faces deemed untrustworthy as mean.

So, they showed these same faces to children who were three to four years of age, five to six, and seven to ten years of age, and they found that children across all of these age groups showed great consensus, or agreement, and rated the faces that were deemed as highly trustworthy as nice and the faces that were deemed untrustworthy as mean.

So, this research shows that judgments about how trustworthy someone is does not require having evidence about someone.

Children can make first impressions about how trustworthy you are based on how you appear.
Measuring trust in the credit industry is key. Without it, you might as well cut your cards and move on.

How Credit Systems Guarantee Trust: Key Findings

Contributor / Bruce Carruthers
Bruce Carruthers Sociology Credit,Government,Measurement,Regulation Trust is an everyday problem. It’s ubiquitous. It’s something that we face all the time, but it’s not always something that we consciously think about.

These kinds of practical rules of thumb really drive the kind of calculative, quick evaluative decisions that cab drivers make every day, thousands of times.

So, credit is a big thing, and trust in credit is an absolutely crucial issue.

Lenders are vulnerable to the borrowers, depending on the size of the loan, and they’re uncertain about whether the borrowers will be willing and able to repay the loan in the future.

And the thing about credit is that modern economies absolutely depend on credit. Credit is the lifeblood of the consumer economy.

There would be no housing market; there would be no market in cars; there would be no sales and durable goods if people weren’t able to borrow money through credit cards, through mortgage loans, through car loans, and so forth to facilitate those purchases.

So, in the issue of credit, sociologists have studied how lenders actually evaluate the trustworthiness of potential borrowers. And this is done by some people in the context of bankers who are looking at customers who want personal loans or who want small-business loans — stuff like that.

And what they found is that the bankers also were concerned deeply about the trustworthiness of the borrowers.

So, they do collect a lot of data. But it turns out that even when you’ve got all the quantitative information you possibly want — you’ve got the credit scores; you’ve got the loan-to-value ratio; you’ve got all that kind of stuff — it still turns out that sometimes the numbers are equivocal.

What are called “relational proxies” become very important. And that’s a situation where the lending officer will kind of ask themselves, “Do I trust this borrower? Do I think that they are of good character? Do I believe that they’re being really sincere when they say that they plan to repay the loan?”

Those studies of credit focus on situations where lenders and borrowers can actually meet face-to-face, or one person can look across the table at another person and decide whether they’re trustworthy.

But we know that credit in modern society has become much bigger than that. It now is mass credit. Millions and even billions of people are obtaining credit, and they’re getting it from folks who have never met them, will never meet them, and will never sit across the table from them.

How is this possible? Well, the answer is, what we have developed to manage the trust problems in mass credit is a giant informational apparatus that provides lots of information about would-be borrowers and their trustworthiness to would-be lenders and doesn’t depend so much on face-to-face interactions and direct contact.

So, the importance of this kind of informational apparatus is really made obvious in studies of how credit card systems, which are very common in the West and which have been around in the U.S. since the 1950s, have migrated to the post-socialist societies of Central and Eastern Europe — places like Russia.

And what happened was, it turns out that to build a credit card system in Russia is very difficult as compared to the United States.

It turned out that a lot of this background information system that we in the West rely on to track people’s credit records, to keep score of whether they bounce checks and whether they fall behind on payments and how good they are and how in debt they are — that apparatus didn’t exist in places like Russia and had to be built from the ground up.

And it’s that apparatus much more than old, face-to-face direct contact between lenders and borrowers that proves to be critical for the development of mass credit in both Russia but also in the United States.

So, in my own research, I’ve been very interested in the emergence, the historical emergence, of this giant informational apparatus that undergirds modern credit cards. But it turns out it undergirds lots of other forms of credit as well: bond ratings, small business credit, and whatnot.

And the big shift that I see — that started in the middle of the 19th century and which continues to this day — is a shift from credit and issues of trust that previously was posed as a matter of character: Is somebody trustworthy? How do I know that someone in their heart is trustworthy and will repay the debts? How am I connected to that person directly?

We shifted from a world in which that was how you dealt with trust to a world in which, now, we don’t worry about whether we know someone, and we don’t worry so much about their character. But we rely very heavily on all kinds of quantitative, standardized information that has been gathered and processed and interpreted by someone.

It’s no longer a world in which you as a lender have to worry about the five or ten or twenty people that you can know personally a lot about. Now you can scale it up so that you can judge the creditworthiness of millions of people — billions of people! — millions of businesses.

It’s also information that migrates in the sense that it can be used in other contexts. And so, when bond ratings were invented, they got adopted by regulatory agencies. So, public policy became beholden to bond ratings, and they got used in private contracts.

So, FICO scores, credit scores, bond ratings — these are all highly quantitative ways of evaluating trustworthiness, and they really have become how credit and trust are governed in the modern world.
How Culture Affects When Negotiators Cooperate

How Culture Can Influence Whether Negotiators Cooperate: Key Findings

Contributor / Jeanne Brett
Jeanne Brett Negotiations Swift Trust,Reciprocity,Institutions and Context BUMPER: Trust and Social Sanctions

There are really three key papers to understand culture and negotiation strategy in the role of trust in that relationship. The first one is one that identifies swift trust, and this is Meyerson, Weick, and Kramer’s work.

They were looking at film crews. And their observation was, these film crews coalesced very quickly and used a lot of cooperative behavior. They were assuming that the other parties in the team were professional, competent, and trustworthy.

BUMPER: Swift Trust in Negotiations

When we take a look at negotiation research and we think about Meyerson, Weick, and Kramer’s work, we see a lot of similarities between the film crews that they studied and negotiations.

In the first place, negotiators come together and they typically don’t know each other. When they’re putting together a new business deal, they don’t have a history. They may have some reputation that goes in front of them, but they don’t have a personal history.

Meyerson and her colleagues propose that to get trust going, people have to wade in; they can’t just sit back and wait for the other party to act in a trustworthy manner. But the way to get trust going is to initiate trust, and then that global norm of reciprocity kicks in and people trust back.

BUMPER: Trust and Social Sanctions

I want to talk about Toshio Yamagishi’s research. He was studying Japanese and American participants and putting them in social dilemmas. Now, a social dilemma is a multiparty prisoner’s dilemma.

If you know about prisoner’s dilemmas, you know that they put the two prisoners in separate interrogation rooms, and they offer each of them a deal to squeal on the other. And if nobody squeals, everybody gets a light sentence. And if both people squeal on each other, they both get a really heavy sentence.

But the best outcome would be, is if I squeal on you and you don’t squeal on me.

A social dilemma is the same phenomenon, only there are multiple parties.

And what Yamagishi did is he put his experiment and he varied in two dimensions. He measured his participants’ level of trust, and he had high-trusting participants and low-trusting participants.

And then he put them in a situation of no sanctions or a situation of sanctions. By sanctions, what he was doing is he was giving them money to do the experiment, and if they failed to cooperate, the money would be taken away from them.

And he found that among the Japanese, in the no-sanction condition, cooperation was extremely low; in the high-sanction condition, cooperation was high—particularly there were no differences between high and low trusters in the sanctioning condition, but in the no-sanction condition, the high trusters were willing to cooperate more than the low trusters.

Yamagishi then went and did the same study using American participants. And the first thing he found was that American participants overall were more trusting on a trust scale than his Japanese participants.

But he still sorted them into high- and low-trust groups, and he still had the no-sanction condition and the sanction condition.

But here, he found that the Americans in the no-sanction condition, regardless of whether they were high trusters or low trusters, they cooperated. They also cooperated in the sanctioning condition.

And so, Yamagishi stepped back. He was, I think, very surprised at what his research showed at first. And then he had to figure out how to interpret it.

And his interpretation was that the sanctioning condition cued the Japanese participants to the kind of environment that they lived in, in their everyday social interactions because, in Japan, there are strong norms for cooperative behavior, there is social monitoring and social sanctioning for failure to cooperate.

What Yamagishi argued is that when you take away that monitoring and sanctioning, the Japanese participants had no basis for predicting or expecting the counterparties in this social dilemma to behave cooperatively.

And so, in a defensive posture, they competed in order to defend themselves.

When he looked at the American data again and started to interpret the American data, he says, “The US culture is very different.” He said, “The US culture is much more open; there’s much less monitoring and sanctioning.”

And he said, “These American participants, they have an internal moral compass. And so, they don’t have to be cued by the context to know whether to cooperate or not to cooperate; they cooperate on the basis of their internal moral compass.”

Now, Yamagishi explained his results with a cultural concept called “collectivism versus individualism.”

In individualist cultures, people’s self-identity is a function of their accomplishments. In collectivist cultures, people’s social identity is a function of whether or not they are adequately, in the eyes of others, fulfilling their social roles.

BUMPER: Cultural Tightness and Looseness

Michele Gelfand is another cultural psychologist, and she came along and said, “Hmm, I don’t think so. I don’t think it’s collectivism and individualism that’s explaining Yamagishi’s results.” She says, “I think it’s something called cultural tightness–looseness.”

She defines cultural tightness–looseness very similarly to the way Yamagishi described the differences between Japanese and US culture. She says, “In a tight culture—strong social norms, lots of monitoring, lots of sanctions for failure to fulfill those social norms. And in a loose culture,” she says, “norms are looser. There’s more flexibility; there’s more improvisation in social interaction in everyday life.”

So, Michele Gelfand and her colleagues collected data from 33 countries, and they correlated it with a whole lot of other psychological variables, but they also correlated it with data about history, geography in these countries.

And what they found is that tight cultures have a profile—they have a cultural profile—that is very different from the cultural profile of loose cultures.

And so, the way to understand culture and negotiation strategy is to understand both trust in that culture and to understand whether that culture is a tight culture or a loose culture.

How We Understand Trust in Romantic Relationships: Key Findings

Contributor / Eli Finkel
Eli Finkel Relationships Trust Formation,Definitions,Breaches If we’re focusing on the modern relationship signs of trust, the best place to start is probably with John Bowlby’s seminal monograph on attachment theory.

In this monograph, published in 1969, Bowlby observes that when we’re infants, we are extremely dependent on our caregivers for sensitive support.

If our parents provide us with sensitive support, we tend to conclude that we ourselves are worthy of love and that our significant others can be trusted. If we’re not treated with sensitive support, we draw just the opposite conclusions.

To an extent, we carry these lessons with us throughout the rest of our lives.

Three Dimensions of Trust in Romantic Relationships

The first major theoretical and empirical piece laying out the framework for understanding trust in romantic relationships was Rempel, Holmes, and Zanna’s 1985 paper.

Rempel and colleagues argued that there are three dimensions underlying trust, and they built a self-report instrument to assess each of these three dimensions.

The first dimension is predictability, and they assess it with items like “I am familiar with the patterns of behavior my partner has established, and I can rely on him or her to behave in certain ways.”

The second dimension is dependability, which they assess with items like “I can count on my partner to be concerned about my welfare.”

The third dimension is faith, which they assess with items like “Though times may change and the future is uncertain, I know my partner will always be ready and willing to offer me strength and support.”

The reason why faith is so crucial is that we can never know what situations we’re going to face—whether our partner might encounter some temptation or whether circumstances might get difficult financially and so forth.

And so, it’s really when we have faith in the partner that we’re willing to take this flying leap and make ourselves vulnerable despite all of that uncertainty about the future.

Importance of Diagnostic Situations

Four years later, John Holmes and John Rempel published another piece, a chapter that really served as the first major theory of trust in romantic relationships.

Perhaps the most important thing that it did was it introduced the idea of the diagnostic situation.

If we watch our partner behave nicely to us in a way that happens to be what he or she would like to do anyway, it’s not diagnostic about whether we can trust our partner, whether he’s behaving in a way that warrants us developing faith in him or her.

It’s really when we see situations where the partner is willing to make a sacrifice for us that we can then conclude that we are safe depending upon our partner, that we in fact trust our partner.

Whitewashing the Past Enhances Trust

One of the major ways in which our level of trust in our partner influences our lives is that it biases our memories in ways that benefit our relationship.

In a project that we spearheaded here at Northwestern, we were interested in how trust can bias people’s memories of actual relationship events.

Building on the idea that trust is ultimately a leap of faith, a determination that we can rely on our partner in the future, we explored the idea that trust makes us misremember our partner’s transgressions in a way that makes them seem more benign than they really were.

We conducted four longitudinal studies where we had people record in real time each instance in which their partner did something that hurt or offended them.

What this method allowed us to do is to compare the extent to which they felt hurt and angry at the time with their memory two weeks, four weeks, eight weeks later about how much they thought they were hurt at the time.

What was interesting in these results is that the extent to which we trust our partner predicts our misremembering of the past in a way that makes us more fulfilled in our relationship.

"To be clear, this isn’t forgiveness in the sense that you say, “Well, I’m not as upset as I used to be”; this is a whitewashing of the past. You are in fact misremembering your own personal experience about how you felt at the time of the event.

And it is precisely this whitewashing that helps trust make our relationship as strong as possible.
A study on mushroom hunters shares insight on trust and reciprocity.

Rationality and Reciprocity in Trust: Key Findings

Contributor / J. Keith Murnighan
J. Keith Murnighan Management Reciprocity,Breaches,Social Psychology,Reputation Management BUMPER: Key Research in the Discipline

There have been a bunch of articles on trust that are really important. In 1995, Mayer, Davis, and Schoorman wrote a theory paper on trust that introduced integrity, competence and benevolence as the three critical elements of trust.

Prior to 1995, there had been very little research on trust, for no good reason. Early ’60s and ’70s, there was a lot of work on personality and trust, and trust propensities, and how likely it is someone will trust.

And people would answer questions like, “I believe most people are honest” and other questions like that, and they would try and relate people’s responses to those to their behavior.

And there were moderate predictability but not very impressive. I think that’s kind of why the research on trust dissipated after the early ’70s.

Mayer, Davis and Schoorman were great at coming up with a very noteworthy article that said, “Let’s start studying trust again.”

And so, since the ’90s, there’s been an enormous amount of work on trust.

BUMPER: Trust and Rationality

Gary Alan Fine in our sociology department has written a book on the Minnesota Mycological Society.

And one of the things that he focuses on in this book that relates to trust is that new members of the society — after they’ve gone out mushroom hunting, they come back, they cook their mushrooms and eat them — new members will eat other people’s mushrooms when they haven’t even met the other person. Old members will not.

So, new members want to join, want to become part of the group, want to become members, want to be well thought of, so they say, “yes,” when they’re offered mushrooms that they don’t recognize by someone they’ve never met.

It’s pretty darn dangerous! People don’t choose theirs and are easier to pass it up when they’re already established members — pretty cool.

BUMPER: Trust and Reciprocity

“Attributions of Trust and the Calculus of Reciprocity” — one of my favorite article titles — Madan Pillutla and Deepak Malhotra and I varied how much trustors trusted and then observed how much trustees responded and found very clear indications that the more you trust, the more people respond and reciprocate, especially when they think you’re doing it in a smart way.

That was one of our first studies, and I just thought, very neat and clean and tells us a lot about the trust-reciprocation process.
With only 100 milliseconds on the clock to prove you're trustworthy, the importance of first impressions cannot be ignored.

The Importance of First Impressions and Trust: Key Findings

Contributor / Adam Waytz
Adam Waytz Psychology Definitions,Reputation Management,Swift Trust A lot of the key articles in psychology on the topic of trust I think have really come out in the 21st century. And one really key article that emerged in 2006 was a study in Psychological Science by Willis and Todorov.

And Willis and Todorov conducted a really elegant study that simply discovered the remarkable finding that trust is something that people tend to judge in another person’s face within 100 milliseconds.

Now, how they conducted this study was they gave participants a variety of different faces — they exposed participants to a variety of different male and female faces.

And the first part of the study just involved an unconstrained session where participants made various judgments about these faces.

So, how attractive is the person in this photograph? How likeable is the person in this photograph? And how trustworthy is the person in this photograph?

In the second portion of the study, participants were presented with the same faces extremely rapidly. So, some were presented at 100 milliseconds; some were presented at 500 milliseconds; and some were presented at 1 second.

And various participants, after this brief exposure to the face, were simply asked the question, “Do you find this person trustworthy, yes or no?”

And what they found was very striking. First of all, there was an extremely high correlation between these snap judgments of, “Do I judge this person as trustworthy, yes or no?” after just a brief exposure to a face — a monumental correlation with those judgments and the judgments made in the absence of time constraints.

So, this suggests that people are making judgments about trustworthiness within 100 milliseconds.

What was also interesting was that, as time increased (so, as participants saw these faces at 500 milliseconds or after a whole second), the correlation didn’t really change that much.

So, what these findings tell us is that trustworthiness is something that people judge very automatically, even before we’ve gotten our wits together to really decide how confident we are in our judgment.

And they really correspond to the same judgments we make about trustworthiness when we have unlimited time to judge people.

BUMPER: Key Research on Trust in Neuroscience

Neuroscientists have also really taken up the topic of trust in their studies as well. One definitive paper on the neural underpinnings of trusting behavior comes from Krueger and colleagues, published in Proceedings of the National Academy of Sciences.

This experiment involved a multi-round trust game. So, this is the game where there is an investor that decides how much money to invest with a trustee, and the trustee then decides how much to pay back.

In these studies, the trust game is administered in a similar fashion to how it’s administered in classic psychological studies, in studies within economics; the only difference, of course, was that in this study, participants brains were scanned while they were making decisions about whether or not to trust and how much to trust people.

The central findings of these studies were that there was a central network of brain regions that was involved in decisions about whether or not to trust, and these brain regions are those that are typically involved in what is called “mentalizing,” or thinking about the mind of another person, thinking about the intentions of another person.

So, this mentalizing network was consistently recruited when people were making decisions about whether or not to trust.

What was also interesting was that this study looked at the differences between conditional trust and unconditional trust.

What’s meant by conditional trust is trust with the assumption that my partner in this game might behave in a self-interested fashion. Conditional trust is, I’m only going to trust you if you’re going to repay me, repay my trust.

Unconditional trust has to do with trusting people indiscriminately, irrespective of what you think their intentions might be.

Another major finding of this study was that separate brain networks were recruited when people engaged in conditional versus unconditional trust, suggesting that these are different psychological processes.

BUMPER: Warmth vs. Competence

A short review paper in Trends in Cognitive Sciences by Susan Fisk, Amy Cuddy and Peter Glick really summarizes a body of research that is essential to understanding how psychologists think about trust and how psychologists study trust in this day and age.

What Fisk and colleagues have found over years and years of studies is that we essentially judge people on two dimensions: How warm is this person? So, how benevolent is this person? And how competent is this person? Does this person have the capability of acting on his or her intentions?

And the most interesting finding that comes out of this research is that people don’t treat warmth and competence the same.

People judge these things relatively rapidly; they base a lot of their judgments about whether to approach or avoid another person on judgments of warmth and competence. But warmth tends to predominate our social judgments.

In other words, warmth is the first thing that we judge when we judge another person (competence comes slightly after), and warmth carries the weight of our judgments when deciding whether or not to trust someone.
Contracting is an important step in building an international trust economy.

The Limits of Contracting and Trust: Key Findings

Contributor / Niko Matouschek
Niko Matouschek Economics Building Brands,Economics,Government,Legal Guarantees,Long Term Focus,Regulation,Measurement,Communication,Distrust The economic literature on trust really builds on and grows out of the neoclassical models of the economy that people like Arrow and Debreu worked on in the 1950s.

Now, in these kinds of models, by design, there’s no role for trust, because either the market participants can verify the quality of the product on the spot or they can costlessly and perfectly contract with each other.

Now, even though there’s no role for trust in these models, it’s still a useful starting point for us because if what you’re trying to do is understand the role of trust in an economy and to what extent it limits the efficiency of the economy, you need to have some comparison point — because if what you’re trying to do is understand to what extent the lack of trust limits the efficiency of markets, we need to compare that to something.

And a natural comparison point is an economy in which there is no lack of trust.

The other reason for why these neoclassical models are a useful starting point for the literature on trust is that they highlight the fact that there’s no role for trust if contracting is perfect. And so, to understand trust, we first have to understand the limits of contracting.

BUMPER: Economics of Contracts

That’s what brings me to the literature — the economic literature — on contracts. And one way to think about this literature is in terms of the different types of impediments to contracting that you might be concerned about.

One of them — one that’s probably less well known in the literature but I think important to the current context — are problems with enforcement. Suppose that the state, the government, doesn’t enforce contracts or doesn’t do so efficiently, then what do we do?

Here, Diego Gambetta has this fascinating book about the origins of the Sicilian mafia, in which he argues that the core function, at least initially, of the mafia was to serve as essentially a contract enforcement agency that regular businesspeople would go to when they’re trying to write a contract in which they’re committing themselves to some future action.

Other strands of the literature look, for instance, at just the cost of writing contracts. Suppose there’s no problem with having contracts enforced, but writing contracts itself is costly. My colleague Ron Dye, here at Kellogg, wrote one of the first, if not the first, paper on costly contracting, essentially.

Then there’s the enormous literature on, essentially, endogenous contracting costs, where contracting’s costly because the parties can either take hidden action or there’s a problem with hidden information.

And then finally, there’s a strand that looks at what we call “incomplete contracting” — that is, it’s trying to capture the idea that sometimes we’re simply not able to describe in words the kind of product or service that we’re trying to trade later on.

BUMPER: Economics of Trust

Once we understand the limits to contracting, we can start talking and thinking about trust and the role of trust in the economy. Here, there are really two literatures.

The first one essentially assumes that there’s at least a small number of sellers who, for whatever reason, are committed to selling a good product. They’re committed to keeping their promises.

And then, the question is, what’s the implication of the presence of these good-type sellers, if you want, for the functioning of markets?

Now, one set of papers, which is called the “Gang of Four” papers, is concerned with the incentives of the bad types, if you want — the ones who are not committed to always doing the good thing — to mimic the good agents.

So, we’re trying to understand, to what extent is this mimicking behavior possible, and how does it affect the functioning of markets?

If the literature on reputation games is about good agents, the literature on repeated games is about good incentives. Here, the starting point is to not assume that there’re good agents: everybody just does what’s in their own best interest.

Now, the question is, in that kind of situation, to what extent can repeated interaction, repeated transactions between these agents, allow them to commit to not break their promises?

Now, the key issues here turn out to be to what extent the agents are what we call “patient” — to what extent do they care about future business versus current business?

And the other is transparency — to what extent can current agents observe what has happened in the past? Whether, for instance, I really have broken my promise in the past or not.

BUMPER: Applications and Empirical Evidence

Finally, we can talk about applications and empirical evidence. One application that people have looked at is to what extent reputations are attached to corporate names and can then be traded in the market for corporate control.

The goal is, here, to try to understand to what extent this motive of trading reputation can explain real-world mergers and acquisitions.

Another application that people have studied is the market for illegal drugs, which is exactly the kind of market in which trust is important because if I’m buying drugs from you, A) I can’t verify on the spot the quality of the product, and B) we can’t write contracts.

And so, this is exactly the kind of market which only works if there’s trust between the buyer and the seller.

But in contrast to other markets, this is a market that the government may want to undermine. And it may try to undermine it by undermining the trust between buyers and sellers.

And so, then you can ask to what extent you can do that — for instance, by designing sentencing guidelines appropriately.

In terms of historical studies, the most famous are probably by Avner Greif, who looked at trade in the 11th century, a time when the trading partners couldn’t rely on the governments to enforce contracts.

He studied community-enforcement mechanisms that allowed these parties to transact nevertheless. Essentially, if you cheated on a transaction, then you were going to be punished not just by the counterparty of that transaction but by the community at large. And that provided you with incentives not to cheat in the first place.

The most recent studies use big data sets to try to understand reputational incentives in the marketplace.

My office neighbor, Tom Hubbard, for instance, has this really interesting paper about incentives in the market for car repairs — which, again, is a market in which trust is really important because if I, the car repair shop, tell you that you need a repair, you don’t really know whether you need it or you don’t.
The philosophy of trust explains why we choose to rely upon others.

The Philosophy of Trust: Key Findings

Contributor / Sanford Goldberg
Sanford Goldberg Philosophy Breaches,Definitions,Government,Reputation Management,Social Psychology Philosophers are very interested in the nature of trust. And, in this brief segment, what I’d like to do is try to give a taxonomy of the variety of positions that philosophers have taken on that nature.

In order to do so, I’m going to make one simplifying assumption, which itself is not uncontroversial but is widely shared, which is the assumption that trust is a kind of reliance: to trust someone is to rely on them in a certain kind of way.

And the question that philosophers ask is, what is the type of reliance that constitutes trust?

So, let’s think about trust as follows: to trust someone to do something is to rely on them to do it and to do so out of a certain attitude towards the proposition that they will do it for the right reasons.

If you think of that as the basic nature of trust, the philosophical questions are two: What is the right attitude? And what are the right reasons? And you can think of philosophical disputes about the nature of trust as disputes along one of those two dimensions.

Let’s begin by focusing first on the attitude question. If to trust someone is to rely on them out of an attitude that you take towards the proposition that they’ll do what you trust them to do for the right reasons, the question is, what is the attitude that you have towards the proposition that they’ll do it for the right reasons?

This view derives from a paper by Diego Gambetta entitled “Can We Trust Trust?” And according to Gambetta, we believe that people will do things for the right reasons, and it’s that belief that underwrites our reliance on them.

I call this the “belief view.” This view came under scrutiny among philosophers in a very influential 1986 paper by Annette Baier entitled “Trust and Antitrust.”

She disagreed with the belief view and thought that the attitude central to trust couldn’t be just believing that the person will do what she’s trusted to do for the right reasons.

The problem with the belief view, according to Baier, was two-fold: first, it failed to distinguish trust from mere reliance, and secondly (and perhaps more importantly), it failed to make sense of the idea that when you trust someone and your trust is violated, you feel a sense of betrayal rather than mere disappointment.

And, in fact, that thought that the violation of trust occasions a sense of betrayal, not mere disappointment, has led many philosophers, after Baier, to think that the belief view is false.

A second view, again concerning the attitude that’s central to trust, is what I would call the “affective attitude view.” This view is owed to a philosopher by the name Karen Jones, who wrote a paper entitled “Trust as Affective Attitude.”

And what she wanted to try to capture was the idea that there is an emotional flavor to trusting. So, her thought was that the attitude central to trust wasn’t mere belief but was something like a felt optimism towards the proposition that the person will do what she’s trusted to do for the right reasons.

That view too has come under some scrutiny. And an objection derives from a 1960 paper by the philosopher Horsburgh entitled “The Ethics of Trust,” suggesting that there are cases in which we trust even though we feel no optimism about the likelihood that the person will do as we’re trusting her to do.

The sort of trust that Horsburgh talked about was what he called “therapeutic trust.” These are cases in which you trust someone not because you’re optimistic that they’ll do as you trust them to do but because you’re hoping that they will recognize that you’re trusting them to do this and that itself will get them to do as you trust them to do.

This sort of therapeutic trust doesn’t conform to the attitude that the affective account lays down. Nevertheless, many philosophers continue to think that there is an affective attitude towards trust, and some have suggested that the best way to think about therapeutic trust, cases where it seems as though there’s no such attitude, are as exceptions to a more general rule.

Cases of the therapeutic trust kind have become interesting to philosophers for another reason, explored at length in Phillip Pettit’s 1996 paper, “The Cunning of Trust.”

Pettit argued that in these kinds of cases, where you trust someone in the hope that their recognition of being trusted will actually make them trustworthy, both gives them a reason to be trustworthy and gives you a reason to believe them — to believe that they’re trustworthy.

So, these kinds of cases have become interesting in their own right.

In reaction to these kinds of cases and in defense of the affective attitude view, two recent papers have suggested that the attitude of optimism is in fact appropriate in all cases of trust that aren’t of the sort that we call therapeutic trust.

For example, Karen Jones in a recent paper entitled “Trust and Terror” and Victoria McGeer in a paper entitled “Trust, Hope and Empowerment” have argued that in all cases of trust that aren’t therapeutic trust, this sort of optimism is in fact appropriate.

A third view about the relevant sort of attitude that constitutes trust is owed to Richard Holton in a paper entitled “Deciding to Trust.” He calls this view the “participant stance view”: to trust someone is to take a participant stance towards them.

The attitude that you have towards the proposition that they’ll do what you trust them to do for the right reason is the attitude of expecting them to do so, with the disposition to feel a sense of betrayal if they don’t.

That view, however, appears to assume one of the things that we would like our theory to explain — namely, why it is that a sense of betrayal is appropriate when one’s trust is violated.

This brings us to the fourth view about the sort of attitude that constitutes trust, a view that’s known as the “normative expectation view.”

To trust someone is to normatively expect them to do what you trust them to do for the right reasons, where to normatively trust someone is to impose a standard on them where you regard them as being such that they ought to do it.

This view, which might be seen as a special case of either the belief view or the participant stance view, has been developed in Walker’s recent book entitled Moral Repair.

Two excellent resources for philosophical approaches to trust are Carolyn McLeod’s entry trust in the Stanford Encyclopedia of Philosophy and Judith Simon’s entry trust in the Oxford Bibliographies online.

I, myself, have relied heavily in this presentation on those two resources.
Raymond De Vries is a sociologist, and his field actually has a pretty unique take on bioethics.

The Rise of Bioethics in Response to Medical Distrust: Key Findings

Contributor / Raymond De Vries
Raymond De Vries Bioethics Institutions and Context,Distrust Bioethics is particularly interesting for people who want to study trust because it arose when a much-trusted profession, medicine, lost the trust of the public.

Essentially, bioethics is the child of distrust in medicine and medical research.

The erosion of trust in medicine began in the 20th century with frightening medical experiments and frightening new technologies.

Trust in medicine was diminished when the public learned of the horrendous experiments done by the Nazis in World War II but also when they learned about experiments being done in the United States by the public health service.

The most famous of these is the Tuskegee experiment, where poor black men in Alabama who had syphilis were denied treatment for their disease by researchers who wanted to learn about the natural course of syphilis.

But the sources of this distrust in medicine and medical research is not just about the poor conduct of researchers and about new technologies.

To fully understand public distrust, we have to look at the larger picture of medicine in society.

Bumper: Tracing the Erosion of Trust in Medicine

In his book Trusting Doctors, Jonathan Imber points out that physicians in the United States began to lose their authority after World War II when they began to be valued for their technical competence rather than their personal integrity.

Another sociologist Andrew Abbott points out that the changing nature of the physician work force altered the relationships of trust between patients and physicians.

In earlier times, when physicians came from the communities where they worked, trust was automatic. But increasingly, patients are having physicians who come from different parts of the country, from different countries, from different ethnic groups.

And trusting relationships that were assumed when these parties came from the same community now had to be regulated by codes of conduct and by ethics committees.

And finally, it’s important to note that all these changes were occurring in the 1960s and 1970s in a period of great civil unrest, in a period characterized by the civil rights movement, the women’s rights movement, the gay rights movement—all of these movements began to challenge the authority of existing institutions, like religion, like law, like medicine, like family.”

Bumper: Does Bureaucracy Enhance or Undermine Trust?

The result of this increased suspicion of medicine was increased oversight in the form of research ethic committees called “institutional review boards,” or IRBs, in the United States, and clinical ethics committees.

What is gained by this formalization of trust? Looked at from the point of view of sociology, you might say that what this does is simply move trust around.

So, trust that used to exist between a patient and a physician or between a research subject and a researcher has now been shifted to trust that has to exist between a patient or research subject and an ethics committee, and that ethics committee and the researcher.

This bureaucratization of trust is a cause for much debate. On the one hand, there are people who say these committees actually facilitate research.

On the other hand, there is evidence that moving trust in this way actually prompts more devious behavior on the part of researchers as they try to evade the regulations of the research ethics committee.

Some colleagues and I did research looking at self-report of misconduct by researchers, and we discovered a significant number of researchers were willing to admit that they ignore the rules of institutional review boards.

Bumper: Bureaucracy, Trust, and Informed Consent

Perhaps the best example of the formalization of trust in medicine and medical research is the use of informed consent. Informed consent is the process of explaining what will happen to a person in the clinic or in research and then asking for their consent to participate in care or research.

This is an important tool of bioethics, one that is assumed to protect a person’s autonomy—that is, the right to say what happens to your body—but also to promote trust in medicine and medical research. But does it?

There’s an irony here that the use of informed consent can actually promote distrust. How does that happen? Let me give you an example.

Studies have shown that more police on the street creates more fear of crime than it diminishes, because people start to ask, “Why are there so many police around? There must be more crime in my neighborhood.”

Informed consent works in a similar way. When given to a patient or a research subject, the natural response is, “Is there some reason I should distrust you?”
Healthcare providers must recognize the importance of trust and communication in building stable relationships with patients.

Trusting Healthcare Providers and Institutions: Key Findings

Contributor / Kelly Michelson
Kelly Michelson Pediatrics Communication,Distrust,Healthcare,Measurement Research about trust in the healthcare setting has generally taken two approaches: the first is to look at it in a qualitative fashion, so to hear personal anecdotes and learn what we can from that; and the other is to look at it in a more quantitative fashion, using scales and measures to see how trust relates with specific outcomes or specific variables.

From the qualitative research, we know that things like developing partnerships, developing relationships, demonstrating competence are all very important components of establishing trust in the relationship.

Most of the quantitative data related to trust in a healthcare setting use trust scales to compare a measure of trust to a particular variable — looking at things like, do women tend to be more trusting than men of their healthcare provider? Are there racial differences related to trust? Are there differences in providers’ and healthcare settings’ relationship to trust?

And these concepts help us to think about how we act — in a clinical setting, for example — and what we teach trainees about how to build trusting relationships with their patients or with others in the healthcare team.

BUMPER: Trust and Communication

Much of what we know about trust in the pediatric intensive care unit comes from literature that looks at communication and how communication unfolds in this particular setting.

We know from some qualitative work, from Carnevale et al., that trust is a really important part of communication in the pediatric intensive care unit.

These authors interviewed physicians, nurses, and parents about communication, identified three different components of communication. And of note, one of them was relational communication. And one key factor in developing relational communication that they identified was fostering trust.

And in another work by Ames et al., we find that trust is not only an important component for healthcare providers to focus on but also for parents.

In this work, the authors interviewed parents of children who were in the pediatric intensive care unit and asked them about their roles. And one of the three roles that they identify was actually that the parents should be trying to establish a trusting relationship with the healthcare providers in the PICU.

In another study done by Vivian et al., we learned about the importance of communication among staff members in the pediatric intensive care unit.

In that study, staff members were interviewed, and we found that poor communication among caregivers within in the intensive care unit can impact trust and therefore impact how they care for patients.

So, again, we’re seeing the importance of trust between providers and patients (or, in my case, parents) but also among providers.

BUMPER: Trust in Critical Decision-Making

In terms of decision-making in the intensive care unit, much of the literature has focused on issues related to pretty challenging decisions for children who are very sick, things like withdrawing or withholding life-sustaining efforts if a child was seriously ill — some pretty serious decisions.

Some of the research I’ve done, for example, has looked at what kind of influencers contribute to a parent’s deciding whether or not to withhold or withdraw life-sustaining therapies if their child was so sick that that became something to consider.

And what I found was that distrust was one of nine important factors that parents are weighing in terms of making that kind of decision.

In another study, Meert et al. interviewed parents of children who had died in the pediatric intensive care unit to find out more about their experiences. And they found that parents who felt that clinicians were withholding information also had a sense of betrayal or distrust towards those physicians.

BUMPER: Enhancing Trust in the Intensive Care Unit

But it’s really important not just to know what happens in the intensive care unit and where trust fits into communication and decision-making; now that we have all that information, we really want to try to impact trust and to enhance better trust and better communication and hence better decision-making in the intensive care unit.

For example, Curtis et al. looked at an intervention where he tried to change multiple components of what was going on in the intensive care unit, including identifying champions for this work, providing feedback to clinicians.

Interestingly, he didn’t find that that intervention changed his primary outcome.

In another effort done by Lautrette et al., they actually educated clinicians about how to conduct a family conference.

And they came up with this mnemonic called VALUE, and each of the letters stand for something different — specifically that you should value and appreciate what the family is saying during a meeting, acknowledge their feelings and emotions, that you should listen to what they say, that you should try to understand their situation and their values, and that you should elicit questions from them.

So, they actually taught clinicians a little bit about how to focus their communication during family conferences in the intensive care unit. And they actually did find a difference.

They found that for families who had family conferences with clinicians who were trained in this manner, those surrogates to the patients in adult ICUs had less anxiety and depression after their loved one had died and less symptoms of post-traumatic stress.
Marketing trust is essential to facilitating exchange and connections in the economy.

When Trust Works and When It Doesn’t: Key Findings

Contributor / Kent Grayson
Kent Grayson Marketing Communication,Legal Guarantees,Reputation Management,Vulnerability So, the most influential and highly cited papers on marketing and trust are the oldest. And it’s not just because they’ve been around for a while but because they were the first to document, fundamentally, that trust does facilitate economic exchange, that it does create better outcomes for buyers and for sellers.

And equally important, it showed that trust is a key mediator between things that buyers and sellers can do and these wonderful outcomes.

So, for example, why does more communication with your exchange partner make things better? It’s not because there’s something inherently great about communication, but it’s because communication leads to higher trust, which then leads to better exchange outcomes.

So, since marketing researchers have found this main finding that trust helps economic exchange, researchers since then have published some really influential papers documenting times and conditions and circumstances when trust may not lead to better economic exchange outcomes.

So, one example is a really influential paper by Atuahene-Gima and Li. They looked at relationships between sales managers and sales people. And what they found is, first of all, that when sales managers make themselves more accessible (they’re around more and they communicate more), the sales person is going to trust more in the sales manager.

And you would think that that would lead to greater sales. You would think that it would lead to great sales, but it turns out it doesn’t.

And what that leads to is the conclusion that a sales manager can build trust in a sales person by being more accessible, but one of the downsides of that is that the sales person starts to learn about the sales managers — the things that the sales manager pays attention to, the thing that the sales manager doesn’t pay attention to.

And as a result of learning about those things, the sales person can use information asymmetry to their advantage. If they know that the sales manager isn’t monitoring certain things like whether they go out on certain sales calls, it means that they can cut corners out in the field, and that will hurt sales.

What’s cool about this paper is that it highlights that trust is enhanced by information exchange, but information exchange also gives buyers and sellers information about how they can better game the system.

So, that’s an example of some research that has shown that trust doesn’t always have positive outcomes, that there’s a dark side to it, that inherently, it can be good or bad.

Related to that, there is another string of research that has looked at contexts where trust is going to be more or less influential. And again, there’s several papers that look at that. One example of a great paper that looks at that is a paper by Garbarino and Johnson.

And what they did is, they looked at relationships between people who buy tickets for a theater company and how their experience at the theater company influences their likelihood of buying another ticket.

But the interesting thing that they did is that they divided the people they surveyed into two groups. One group are people who are subscribers; people who have bought a subscription and who go to the theater a lot. And another group are people who are just individual ticket buyers and they’re probably not going to the theater a lot.

What Garbarino and Johnson found — first of all, they confirmed the finding that I’ve been talking about all along, which is that trust is this key mediator between things that companies can do and outcomes that companies want. But they found that trust is a key mediator only for the subscription holders.

For people who are individual ticket buyers, the main factor that influences whether they’re going to buy again is their satisfaction with the performance that they saw. If they liked the performance, they’re more likely to buy again. And trust didn’t have any influence at all.

And the interesting thing about that is that for subscription holders, satisfaction was not a key mediator for future intent, or for likelihood of buying another ticket.

In other words, as a subscriber, you could be a little bit less satisfied with the performance and still have the intention of buying another ticket as long as you trust the theater company.

So, one of the interesting things about this paper is that, first of all, it shows us something that we’ve already talked about before, which is this idea that if you have trust in a buyer, that they can maybe take advantage of that.

If you think about the theater company, they could have slightly worse performances and still have those subscription holders. But Garbarino and Johnson emphasize another aspect, which is—when you have a relationship that’s trusting, there’s more room for experimentation.

So, this theater company could do an experimental production that might not go over very well, but might not also lose their customers. So, rather than just saying that trust has a dark side and people can take advantage of it in bad ways, it also suggests that trust has a side where people can take advantage of it in good ways.

One example of an influential paper that takes more of an economic perspective is by Brown, D.V., and Lee.

They studied the hotel industry, and in particular, relationships between the corporate office and the people who own or run individual hotels. And what they looked at is what safeguards the corporate office can put in place so that the individual hotels are less likely to take advantage of information asymmetry.

Now, what do I mean by safeguards? I mean these contracts or agreements that can be put in place to try and keep people from doing things that you don’t want them to do.

One safeguard that can be put in place is that the corporate office can actually own the hotel. And when they own the hotel, they’re able to come in and really demand that people do the things that they have to do.

Another safeguard that people can put in place is to monitor, is to put monitoring mechanisms or have people on the property monitoring what is going on and reporting back to the head office. What this paper did is, it distinguished between two types of safeguards.

One is more economic, like the ownership one. The other kind of safeguard is a little bit more social. They are things like acculturating people to a particular corporate culture, which means more training sessions or more corporate events that help people to understand what the norms and values of the corporation are.

And what this paper found is that more rational or economic safeguards actually have a backlash effect — that when people feel like they’re being monitored, for example, they’re more likely to break trust and behave opportunistically than for safeguards that are more about bringing people aboard and making them part of the culture.

So, what this suggests is that safeguards are, first of all, not always going to universally minimize opportunism, even though they might rationally seem like they do, but also that people can resent safeguards; they can feel bad about safeguards, and they can actually have the opposite effect that the company may intend.


Actionable insights for practice

3 Tactics to Create a High-Trust Organization

Contributor / Douglas Conant
Douglas Conant Leadership Leadership,Breaches,Reciprocity In the spirit of a conversation around building trust, it’s mission critical to understand that it’s not a nice-to-have; it’s a must-have.

If you have low trust, in the fullness of time, you will have low performance. If you have high trust, you have the potential to have high performance.

To deliver on that trust benefit, you have to do three things: you have to do your homework; you have to declare yourself; and you have to do what you say you’re going to do, ultimately, and you have to do it well.

Over my forty-year career and in all my study of leadership, I’ve never seen a low-trust culture perform at a high level in an enduring way.

In my experience, a high-trust culture is absolutely essential to deliver high performance.

Trust is an amorphous thing, but it’s really quite simple. There are two characteristics you need to bring to an engagement to engender trust: one, you have to have competence; two, you have to have character.

Let me dimensionalize that just a little bit: Competence says, “I know what I’m doing.” Character says, “I will do what I say I will do.”

And so, it’s not enough just to be a person of good character; you also have to know what you’re doing.

And so, in high-trust cultures, you have to have a collection of people that know what they’re doing and do what they say they’re going to do. That requires the third C between competence, character—the third C is chemistry.

That requires that they all play together well and work towards a common end. But the notion of trust is all about competence and character dealt with, with beautiful chemistry of a high-performance team.

BUMPER: A CEO’s challenge: rebuilding a low-trust organization

When I went to Campbell Soup Company, I had worked in the food industry for most of my career, I understood the structure of the industry and how it worked.

I didn’t know a lot about Campbell soup. What I did learn was it was an even more toxic and troubled place than I had imagined.

At Campbell Soup Company, the year before I came, they had ousted one CEO, they brought an old CEO back to hold things together, they were under investigation by the SEC and the Justice Department for something called “fraudulent conveyance,” and they had severely downsized the organization.

We actually measured the level of engagement using a Gallup Q12 survey and discovered that it was the lowest level of engagement that the Gallup survey had ever measured in Fortune 500 companies.

So, we had a huge trust deficit. That’s what needed to be addressed.

BUMPER: How trust rebuilt Campbell’s Soup

When we had fully assessed the situation in the first six months of my arrival at Campbell Soup Company, we relaunched the company under something called the “transformation plan.”

And we essentially did three things: We made sure we had done our homework and we had a plan going forward. We declared that plan; we declared ourselves boldly. And then we set about the process of implementing that plan and doing everything we said we were going to do.

I think when you’re running a large organization, it’s important to have a rallying cry or an umbrella idea that holds it all together, because there’s so many arms and legs to running an organization.

We came upon this idea that was brought to life the first hour of the first day I got to Campbell when I talked to the people, and I told them, “My core belief is that we can’t ask you to value our agenda as a company until we’ve tangibly demonstrated to you that we value your agenda as a person.

“In my experience, it just doesn’t work any other way. So, job one is for us to demonstrate to you that we value your agenda as a person.”

The employees helped shape that line, and within a week, we had something called the Campbell promise, which was an umbrella over everything we did.

And it was Campbell valuing people, people valuing Campbell, with acknowledgement that job one was for us to value all of our stakeholders in a tangible way.

And we worked that territory for ten years, and we went from having the lowest level of engagement in the Fortune 500 to the highest. And we went to record heights with our top 350 leaders.

See, I believe when you’re trying to build trust and engagement, you have to lead from in front. So, the leadership team—not just at the top but the next couple levels down—has to be fully engaged in the work and modeling the kind of behavior you’re asking from everyone else.
Carter Cast video Avoiding 3 Career Derailers by Trusting Differently

Avoiding 3 Career Derailers by Trusting Differently

Contributor / Carter Cast
Carter Cast Career Derailers Leadership I’ve done about two years of research looking at what derails talented people. Why do talented people not achieve the level that they should in their careers? And I interviewed 60 people. I talked to headhunters; I talked to HR executives; I talked to derailed people; I talked to CEOs.

There are five key derailers that impede the progress of good people—and I’ll tell you what they are quickly—and three of them of the five involve trust, trust issues.

The first one is interpersonal issues led by arrogance, insensitivity, poor listening skills.

The second one is the person doesn’t manage and build their team well. They micromanage; they’re overbearing.

A third one is difficulty adapting to change. People are especially vulnerable to this one as they age and they don’t stay current on technological changes in the market, shifts in the environment, the strategic environment that they’re working in.

The fourth one is being nonstrategic or too narrow. In this case, the person focuses on getting good at one thing at the exclusion of getting a broad set of experiences.

And then the fifth reason people derail is—it sounds simple, but it’s not delivering on promises. Your word isn’t your bond.

BUMPER: 3 Career Derailers that Erode Trust

Of those five derailers I just mentioned, three of them involve trust issues.

First, on the interpersonal issues, if someone is insensitive and doesn’t listen, they just don’t engender trust in other people. They’re seen as being all about themselves, about their career, and not being someone that actually has the entire group in mind.

And so, that erodes trust.

The second one that is involved with trust is difficulty building leading teams. A lot of times the reason people derail when they have difficulty leading teams is because they try to do the work themselves and they don’t show the trust of the group to be able to do the work.

So, they’re always looking over their team’s shoulder; they’re always correcting work that doesn’t really need to be corrected. And the team is demotivated because they feel like they’re aren’t trusted by their boss to do their jobs.

And then this third area, third derailer that involves that involves trust is obviously not delivering on promises. This is an insidious derailer.

Slowly but surely, somebody’s well-intentioned, but they don’t deliver what they say they were going to do when they said they were going to deliver it. And people just don’t want to work them over time, because they can’t be counted on.

BUMPER: How High-Performers Avoid Career Derailment

I also studied high-performing, high-potential people for probably nine months: What do they do differently? And I could find this information by looking at 360 feedback.

So, if you look at the feedback of your peers, of your subordinates, and of your superiors in looking at how you’re rated on different competencies, high performers have several traits that are different as it relates to trust and derailment.

One is, across the board, people that were considered high potential, high performers by their organizations had a sort of authenticity about them. They were not afraid to say what they saw and to be candid and forthright in their feedback. And that engenders trust with other people.

For example, I interviewed Dick Costolo, the former CEO of Twitter.

And he said, “The most important thing about my management style that I think has helped me in my career is I say it like I see it, so people know they don’t have to second guess what I’m trying to say because I will tell them.”

And sometimes it seems like that’s a tough strategy because you’re saying difficult things, but in the long run, it saves you a lot of grief.

The other recurring theme of high performers as it relates to trust is they had a strong tendency to seek to understand before being understood.

There was this constant theme when I talked to high-performing people or I talked to HR executives about their high performers that the high performers were empathetic, they were good listeners.

And by having this attitude of “others first,” they engendered trust. People saw that they genuinely wanted, this person wanted them to succeed and wanted to help them, and they developed a much more trusting relationship.

So, those were the two biggest ones: being authentic and candid, even when it’s difficult, and seeking to understand people instead of just trying to be understood.
Change is inevitable. Having a picture of where you've been helps manage change as it occurs.

Building Team Trust to Manage Change at Work

Contributor / Grover Wray
Grover Wray Human Resources Human Resources,Mergers and Acquisitions,Reputation Management,Social Psychology As a Chief Human Resource Officer, trust is fundamental to being able to ensure that employees are engaged, they are motivated by what they do and they can contribute a degree of value back to the organization, and in return the organization gives them a degree of value. And when that equation of value that the person gives to the organization is equal to the value that the organization is giving to them, then you have trust. That’s what trust is built on. And so as a Chief Human Resource Officer it’s absolutely critical to ensure that you are effectively building mental maps for all of your team members starting with those who come into the organization on day one.

Essentially a mental map is an ability for somebody to be able to anticipate and to expect what might happen. An example, a simple example would be driving to and from work. If we drive to and from work every day the same way, very soon we have a route. We don’t think about what we’re doing; we just start to drive and the next thing you know you’ve arrived at your destination and you find that you arrived without even giving a thought to how you got there.

BUMPER: Understanding Trust through Mental Maps

When I was first introduced to this idea of mental maps it was through the work that I was doing with Arthur Anderson. I got a phone call one day from a partner who said, “We are thinking about outsourcing this accounting function and I was visiting with the CEO of this company and he said you’ve put a lot of effort and time into making sure that the technical transition of this work goes smoothly. But if you’re going to be in this business full-time you better put as much attention to how you manage the people as you do the technical transition.”

I ended up visiting with the CEO and ended up visiting with all of the team members and that’s when the light bulb went on for me. It was the CEO who understood the dynamic of what was happening to his team members who had an expectation, a trust, and this trust was a very significant trust because it was in a small town. It was a few team members.

And it was at that moment that I realized that these employees could not go through a transition like this without understanding the expectations of what a new company was going to provide to them. And it was then that I realized the power of that mental map and applied that in every situation that we encountered after that, and in every situation almost to a T that process or principle worked very well, because you were addressing exactly what the issues were and the uncertainty that gets created when a mental map gets destroyed.

BUMPER: 5 Steps to Building Trust During Mergers

I realized that principle of a mental map was exactly what was needed inside a merger and acquisition or significant change situation. An employee was in an uncertain moment when all of a sudden the mental map that they had built about themselves and from the company was now gone. The trust that the organization had placed in them and they had placed in the organization was now gone. And without replacing that trust with a new map that would build new trust you would never gain the emotional commitment of the team members.

As a leader, the first thing you have to understand is the very first question that somebody has to have answered for them before you can provide any more information to them is: Do I have a job?

The next layer of that foundation is: What are my salary and benefits?

If that question is answered then the third question in that layer of questions becomes: Who is my manager?

And then the fourth question in that layer is: What is my team or who is my team? Who will I be interacting with?

And then the fifth layer, which is the most important layer, but it’s the last layer – (which is somewhat counterintuitive) is the culture. What is the culture of the organization like? What are the values of the organization? If you start with culture, which sometimes we might tend to do because we want that to be seen as a very positive thing, that’s good but I still don’t know whether I have a job. And so it’s not going to resonate with me until you answer those other foundational questions.

Follow that pattern through, and each of those pieces of the pattern put another piece into the mental map until you have sufficiently formed a mental map for that individual as they move into a new environment.
Trust building begins by showing you care and are willing to comfort and support another.

Building Trust by Learning to Listen

Contributor / Kelly Michelson
Kelly Michelson Pediatrics Healthcare,Reciprocity,Regulation The pediatric intensive care unit can be a very complicated place with a lot of players — there’s doctors, nurses, social workers, chaplains; there’s a lot of people just in the PICU itself.

And then for a particular patient, there may be even more physicians — subspecialists, other providers, just a lot of people running around all the time and people changing over.

I think each component of this VALUE mnemonic is important: we want to value what the family is saying; we want to acknowledge whatever emotions the family is going through; we want to listen; we want to understand where the family is coming from; and we want to elicit questions from the family so that we know that they understand as well.

If I had to focus in on one or two things, I would highlight two. And the first is the L for listen.

When we’re having these conversations, one of the ways that we can help support families is to stop talking and hear what they have to say, even if it means silence, because sometimes it’s in the periods of silence that families realize what they can or feel like they need to say.

And then, the other piece of it that I think is really important and sometimes doesn’t get as much attention is the piece about getting to know the patient or the family or what their issues are — asking them sometimes personal questions about why they feel a certain way, why they’re making a particular choice, and even personal questions about what their situation is like, whether it’s unrelated to the actual decision or discussion that’s going on.

I think it’s really helpful to know that the patient likes to swing on the swing.

And that kind of conversation fosters a lot of trust and support from both sides. So, now the mother knows that I care about her child, or the father knows that we care about their child.

And the healthcare provider also has a personal investment in this particular patient because now I can see what this patient looks like swinging on the swing, and I have a whole different perspective after that kind of information.

BUMPER: Learning to Trust Your Patients

In pediatrics, it’s rarely the patient who decides — sometimes, but rarely — it’s often the parent.

In an ideal world, we’re all making decisions that are important for this patient; we’re not even making decisions necessarily about ourselves. So, when you feel like you don’t have trust for a parent who’s making a decision about a patient, it can be very challenging.

And I think that one of the things that can help mitigate some of those challenges and help smooth things over is to really focus on understanding why the parent is doing or saying what they’re doing, where their behavior comes from.

And I can give you an example. There’s a parent in the intensive care unit whose child has a cancer that’s metastasized and who will likely die — their child will likely die.

And this parent has very difficult interactions with the healthcare team and is often questioning things and doing things in a way that you can’t imagine how that’s helping their child.

But I think that if we understand what the perspective of that particular parent is and why he or she feels that way, and if we look back and we realize that maybe it took this particular parent two months to get their child into the hospital and they feel guilty about that and that they impacted the outcome and that a lot of those emotions influence how they behave, I think it can help unpack the situation.

Really trying to understand the perspective of the parent can be useful when there’s a sense of distrust about what the parent is doing and why.
Harry Rosen establishes consumer trust with every suit they sell.

Consumer Trust in Company Culture: A Competitive Advantage

Contributor / Larry Rosen
Larry Rosen Retail Breaches,Building Brands,Institutions and Context,Leadership,Long Term Focus,Regulation,Retail I'm Larry Rosen, the CEO of Harry Rosen Inc., Canada's largest quality menswear retailer, and for us, trust has always been the centerpiece of our organization. And without earning the trust of our customers, without earning the trust of our associates and earning the trust of our vendors, I don't think we could point to 62 years of fairly significant success in men's retail.

We find that when you can earn a man's trust and make the process easy for him, he'll reward you with his loyalty over the years, and when you think of a man's shopping every year and building a business wardrobe and a personal wardrobe, that's pretty good annuity to have if you can keep his trust.

And so, everybody knows it's part of our cultural mission as a company not to let a customer down, not to lie to a customer. If something doesn't look right on a customer, you tell them. I mean, it's not about the sale today. It's about the long-term relationship we have. So it's not uncommon to hear on a selling day that, "You know what? That's not the right thing for you today. I don't have exactly what you need." To us, selling isn't about short-term. Selling is about lifetime value of a customer. And, you know, the other part of it is when you violate trust, when you let a customer down and listen, we have 1,000 associates, somebody's going to do something that upsets a customer where he feels he's been betrayed, and how we recover from that is so critical. I personally spend a decent part of my week dealing with customer problems¬¬ — we'll do whatever it takes to earn back that trust.

And even when they've lost confidence in us, when we react the way we do with that very, very proactive approach to earning back their trust, they come back to us. And in fact, they become more passionate about our brand.

BUMPER: Fostering a Culture of Trust

There's — the things that keep our associates in line with our values — there's really two things that really make a difference. One is, we as a company spend more on training, I believe, than any other company per associate. We train them on how to deal with the customers. We teach them all the philosophy of earning customers' trust. The other part that really is important, and this is, I mean, people have written on this, but it's not easy to quantify, is the culture of our company.

Our culture supports the right behaviors. It's funny because on occasion, a competition have come in and hung out big dollars and hired away people thinking they're going to get — going to get a piece of our expertise — but when the culture is a surrounding, the behavior isn't as natural, and people — people will behave in accordance with a great corporate culture.

BUMPER: Redefining Customer Engagement

It's interesting because on a strategy level, when we saw that the landscape was changing three or four years ago when the American department stores announced they were coming in, we realized that we had to look for competitive advantages that were compelling that couldn't be duplicated. Why do customers really choose us? What makes us a compelling choice? And what can we do that they can't imitate?

A pinnacle moment for us as an organization — as a relationship-based seller — came a few years ago when we used to call our associates on the floor, we used to call them sales associates. And we realized that that term really, I mean, everybody has this thing of a salesman on the floor and they, you know, the guy you have to hide from and who, when he approaches you, says, "May I help you?" and you say, "I'm just looking. Thank you."

And we changed their name to clothing advisors because we wanted a name that said that these are experts, that they're highly trained experts that are going to help make the shopping process for you easier. That one little change improved the whole culture of the organization, and I think it improved the client experience because we consistently refer to our people on the floor as clothing advisors.

You think it's, I mean, well, that's a simple name change. But it really encapsulated what we were trying to do and what our key competitive advantage was.
The change of name from a sales associate to clothing advisor, I think it really related a lot to the issue of customer trust. It supported our competitive advantage, but it also supported the fact that our clients could have trust in our associates to help them build their wardrobes and shop with us long-term.
Col. O'Grady uses the trust equation to combat a crisis in Afghanistan.

Establishing Trust in Your Organization: What an Army Colonel Learned on the Ground

Contributor / Col. John A. O’Grady
Col. John A. O'Grady Government Breaches,Definitions,Government,Reciprocity,Regulation,Reputation Management In the organization in which I am in, the word trust gets thrown around a lot. And in that regard I started to find myself getting very frustrated by constantly getting hit with the word trust and then no one really then explaining what that meant.

We decided to unpack trust and really think about what that meant to us as a group, and it did a couple of things. It raised a level of awareness and it provided a common framework from which we could all then understand trust.

So the trust equation is really just that, it’s a word equation. So trust equals integrity or honesty plus reliability or dependability, plus competence, plus communication, plus genuine care.

So in crisis management, the trust principles are a great tool to first analyze what areas of trust have been most affected. And then it allows you to – once you’ve done that – apply individual and organizational energy most effectively at those areas first to start to re-establish trust.

BUMPER: Theory to Practice: Principles of Trust in a Crisis Situation

So there was a pretty critical moment in Afghanistan where the local governor of the province that I was in did not show up at an event that had a lot of work leading up to it to even bring to fruition. Multiple constituencies were attending this event and it was going to be a formal acknowledgement of a deal to bring on local militia. Everybody is there and the governor does not show up. The whole thing pretty much falls apart along with all the work that had gone to bring us to that moment.

In my next meeting with him a week later I said, “Hey look, by not showing up, your integrity…people think you’re a liar now. You weren’t reliable on being where you said you were going to be.” In talking to him about that he was concerned because ultimately his driver went the wrong way and he was in the back of the car not really paying attention. Communications aren’t good and so we had no way to just pick up the phone and be like, “Hey, we’re going to be a half-hour late” type of thing. And so everybody left, he never showed up and that was really the reason, and he was ashamed a little bit because he thought his competence and that of his driver would come into question. And he’s the governor; he’s supposed to know where everything is. What do you mean you don’t know how to get to a town in your province? It’s not that uncommon in that area. It’s not easy.

BUMPER: Establishing Trust Through Honesty and Genuine Care

So we used that to frame that discussion and then what I was able to do to present to him a way forward was bring again into light the kind of equation, and say, well I understand your concern that your competence is called into question, but by not addressing this and just taking it kind of in one area of competence which is really not as big a deal as maybe you think it is, we’re affecting the integrity, genuine care, dependability, reliability. So you have a choice here.

So in that situation with the governor it was also an opportunity for both he and I to use parts of that trust equation as well and demonstrate to each other that we were willing to be honest with each other. He didn’t have to share with me that bit about the competency. You know I could demonstrate to him that, hey, I genuinely care about what’s going on here, man. I genuinely care about how you’re viewed.

We ultimately ended up establishing trust with each other and moving the trust peg in the right way using those different components of the equation.

The net result was then to take this meeting that had completely collapsed and a month or two later re-establish that meeting and bring to fruition the security forces in that area that had a very positive effect in a local…a very localized way. So it was a win, really, in a number of different areas with a number of different constituencies starting with me to him, and then larger [win for] us [and] the populous through the security forces.

Fostering Customer Loyalty through Trustworthy Data Practices

Contributor / Praveen Sharma
Praveen Sharma Data Analytics Trust and Data,Communication,Building Brands,Long-Term Focus As, we the airlines, are in a consumer business, we are trying to sort of surprise and delight our customers. We are trying to create this personal engagement. And, when we do that, when we try to do that we have to use certain personal information sometimes with analytics in the data which we have from all the customers.

It is something which we need to be very careful about how we use the data, and how we not sort of break that trust. So, for example when we capture the data on what interactions a customer is having with the airline, or where they are sort of shopping and what they are buying and all, there is a utility which we have which we can use to inform their future interaction.

So, when a person in our case traveling internationally, and sometimes in the country where they have previously not traveled, the credit card companies may have rules around calling certain transactions fraudulent and decline that transaction.

However, if I know that the particular customer went on a flight to Peru, for example, and then they are in Peru and using their credit card, I can use that, pass that information to the credit card company and say "no, it is not fraudulent transaction; it is this particular customer who has just landed on our flight is using the credit card."

In that way we can earn the trust because nowadays there are customers who are having interaction in various other channels, they believe that if the company has the information, why didn't they share it with someone else who could have made my life easier. And, we have to be very careful how we use that, because a customer may not appreciate that they might have told us all we might have inferred this.

So, that may appear very creepy. So, we have certain examples where we provide our flight attendant certain data about our customers, by which they can use that to create a positive interaction with the customer.

And, one of those datasets could be just the birthdate, not the year, just the day, and we leave it to the flight attendants to sort of gauge the customer before they sort of wish them Happy birthday. So, there are certain customers who may feel pretty good about it, certain not.

You have to also be aware of the delivery person who is delivering the data. A very good example that came about is we had a situation where flight attendants were sort of wishing people birthdays on their on their flight as such, and we got a note from the husband of the flight attendant who sort of said "that you know what, the whole day she was wishing customers their birthdays, but nobody wished her back.

It was her birthday. So, imagine sort of, you know, the envy. For our employees, we should have the data, we had the data, but we just sort of did not use it. Imagine how cool it would have been if the pilot, or even the screen that she had brought, lit up.

You could have earned her trust also, and then cleared this very positive engagement, which could be useful. So, I think it is having the full context, and making sure that we can use the data in the right moment is pretty critical.

Four Strategies to Increase Trust across Your Organization

Contributor / Cecily Cooper
Cecily Cooper Organizational Behavior Leadership,Vulnerability,Communication Well, trust and leadership has been shown time and time again to relate to many key outcomes, such as employee job performance, helping behaviors, and job attitudes.

So, as a senior leader, you want to do anything that you can to increase trust in leadership across levels of the organization.

Now, one of the first key things that you can do is make sure that you treat your employees fairly because fairness engenders trust.

So, if employees feel that they’re being paid fairly, that decisions are made in a consistent and unbiased fashion, and that they’re treated with dignity and respect, then chances are they’re going to trust you.

Now, on the other hand, if you hear employees complaining that things are just not fair, then chances are they don’t trust you. And so, that’s one key thing to remember.

Second, you have to make sure that your words and your actions are aligned—so, there has to be consistency between what you say and what you do.

Third, transparency is really important. And by transparency, I mean that you need to communicate as openly and frequently as possible with employees and also give them as much information as possible.

And the last thing that I would like to mention, and this is a little different because most research on trust has been looking at employees trusting their leaders and why that’s important for so many reasons, but now we also know that it’s really important that employees feel trusted, that employees feel that their leaders trust them.

And since trust is a reciprocal process, if the employees feel that the leaders trust them, they’re also more likely to trust their leaders.

So, then the next question is, but how can a manager signal that they trust their employees? There’s a lot of different things that they can do.

They can give their employees more responsibility, more autonomy; don’t micromanage, don’t monitor—overly monitory—your employees.

And if there are positions that need to be filled in the organization, promote from within; don’t hire externally.

Bumper: Understanding How a Trust Breach Is a Matter of Perspective

If you’re a leader and you’re accused of something, there are two questions that you should consider.

The first is, are you actually guilty?—because if you’re not guilty, then it benefits you to deny as quickly as possible, and also, if there is any exonerating evidence, to also offer that evidence to support your denial.

But what if you actually are guilty? Well, there’s a second important question.

And that is, was the transgression (that is, what you’re guilty of doing) a result of a lapse in competence versus integrity?—because research tells us that integrity-related issues are much more difficult to overcome than competence-related issues.

But at the same time, perception of the specific event can be malleable.

For example, if you just made an honest mistake or you did not have adequate knowledge and that’s why you didn’t prepare the tax return correctly, that’s a very different issue in other people’s minds than if you were trying to misrepresent the taxes.

Bumper: How “No Comment” Elicits Distrust

You don’t want to remain reticent on the issue; in other words, it’s really risky to not respond.

The problem is that even if people just hear an accusation, they’re likely to passively believe it unless they’re given a reason not to.

But the tricky thing for leaders is there could be a lot of reasons that they don’t want to respond. So, there could be legal reasons that they should not respond, or if they respond, they know that they might implicate a third party.

And so, for a lot of these reasons, you will see people delay responding or say, “No comment”—which is very frequently used.

Now, the intention might be to get people to delay judgment for a while. But what research shows is that instead of delaying judgment, people actually are more prone to make judgments and come to the worst possible conclusions.

By remaining silent on the issue, you’re not doing anything to mitigate this accusation of guilt by denying, and you’re not apologizing, so you’re not expressing any remorse.

And so, what happens is then people will think that you are in fact guilty, and you’re also not remorseful.
Paola Sapienza Video - How Culture Impacts Financial Markets in the Absence of Trust

How Culture Impacts Financial Markets in the Absence of Trust

Contributor / Paola Sapienza
Paola Sapienza Finance Economic Exchange BUMPER: Understanding Culture and Trust

In the absence of trust, people are willing to engage in transactions, especially in financial transactions. But where is trust coming from, and how is it spread across countries?

We know there are remarkable differences across countries, with northern European countries being very high on the trust scale and some Latin American countries being at the bottom of the distribution.

In fact, what we know, and it’s very interesting, is that immigrants from countries with high trust, when they move to countries with lower trust, they tend to hold onto their original trust level. And this suggests that our upbringing has something to do with how much we trust.

So, if I think about banks, insurance companies, trust is a fundamental ingredient to convince customers to depart themselves with their money and indeed trust the financial institution that they would do the right thing.

BUMPER: Winning Customer Trust: Dealing with Culture and Bias

It’s also important to understand that when dealing with different ethnic groups, different social background, where is the level of trust or mistrust coming from and indeed understand how this could be ameliorated at some level.

For example, we have evidence that shows that people tend to trust more people that look much more like them. So, diversity in facing customers could be an important mechanism to generate trust.

If we have that financial institutions are too homogeneous and they don’t reflect the demographic of their potential customers, it’s hard somehow to have customers relate to the specific experience.

But generally speaking, evidence shows that lack of trust indeed makes it really, really hard for some customers to walk into financial institutions.

And so, dealing with this reality and understanding the different reasons why people may or may not trust is a very important aspect of every customer interaction in the financial service.

We need to make sure that we unbias our customer force to make sure that they don’t bias themselves to favor some specific people.

But we also know that our customers, they have biases, and they tend to trust less people that look very different.

For example, a big debate among executives nowadays has been to the extent to which, given the fact that women are one of the largest buyers in the US nowadays of insurance products, why our customer force doesn’t mimic that, given the fact that they’re going to be the recipient of effort to convince them to buy some of this product.

Given the fact that women are among majority buyers of insurance, the question is whether a customer force that is more balanced and reflects this demographic should really be a conscious decision on the side of executives.

Similarly, think about the ethnic changing demographic of the customer base—to what extent corporate America should reflect that in order to, A, be able to understand better the needs of this group, and B, in order to really inspire a level of trust and confidence in the financial institution that we know is fundamental for a good relationship to start.

How Trust Translates from Personal to Workplace Relationships

Contributor / Eli Finkel
Eli Finkel Relationships Building Brands,Trust and Networks A lot of the essential features are similar when we talk about trust in romantic relationships, friendships, coworker relationships, and so forth.

One of the things that’s been exciting among relationship scientists is just how many different ways we need to trust our romantic partners—at least in contemporary western societies.

So, in contrast to, say, 1800 in the US, today we’re much more dependent on our spouse for a broad range of psychological needs.

It used to be that we looked to our marriage for a relatively circumscribed set of goals, and we looked to our broader family and friendship network for all sorts of emotional support.

But increasingly, especially over the last 30 or 40 years, we’ve looked to our spouse to take on a larger and larger proportion of our most important psychological needs.

For example, the size of our intimate social networks—that is, friends, families, and so forth—has gotten smaller; the amount of time we spend with those people has been reduced; and the end result of all of that is that this one person has taken on enormous significance.

And so, the extent to which we have high trust in this one person is a stronger predictor of our overall well-being in life today than it ever has been in the past.

Bumper: Three stages of trust development in romantic and work relationships—predictability, dependability, and faith.

To a large extent, we go through a similar set of stages when we think about trust with people at the workplace.

For example, when we first get to know coworkers, we are really trying to figure out, can I predict the way they’re going to behave and respond in given situations?

Then over time, we start to conclude, what sort of person is this? Is this somebody that I can trust?

And then finally, if you have a long-term relationship at the workplace with someone, you can develop this sense of faith that the person is out there today and in the future and has your best interest at heart.

Bumper: Consumers Trust Familiar and Unfamiliar Brands Differently

We talk a lot about trust in interpersonal relationships, but one of the things I’ve been interested in is trust for inanimate objects. And one of the things that we’ve explored is trust for particular brands.

In one study, we played consumers radio advertisements, and at the end of the advertisement, we played a disclaimer—all the nice content comes first, then the disclaimer, and then the not nice content comes at the disclaimer.

But we manipulated whether the disclaimer comes at the regular pace that people talk or whether it’s super fast.

Now, the logic behind that manipulation is that fast disclaimers are cues that maybe somebody’s trying to pull a fast one on you, are cues to untrustworthiness.

And what we found is that consumers tended to be less trusting of the product that used the fast disclaimer relative to the normal-paced disclaimer, and they had lower purchase intention toward that product.

But in this research, we manipulated a second variable: Is this a product that you’re familiar with and already have some trust in, or at least some respect for? Or is this a new unknown product?

And we found something interesting. This fast disclaimer speed—the tendency for consumers to distrust you if you use a fast disclaimer—applies only to the unknown product.

And this harkens back to the idea of trust as faith—once you have gotten to know a brand particularly well, you’re no longer monitoring if they’re engaging in potentially untrustworthy behavior.

And so, even though they’re doing this fast disclaimer—this relatively untrustworthy thing that they might be trying to pull over on you—you stop attending to those sorts of cues.

In contrast, if you don’t know the brand and you’re monitoring the behavior of the brand or of the advertisement for the brand to try to develop an understanding, is this brand worthy of my trust?—that’s when you see that the fast disclaimers tend to be punished.
Without trust and transparancy in business, consumers fall at risk of getting ripped off whenever they shop.

If You’re Getting Ripped Off, It’s Not Surprising

Contributor / Niko Matouschek
Niko Matouschek Economics Building Brands,Leadership,Long Term Focus,Sharing Economy,Vulnerability I think it’s an underappreciated fact that successful market economies, like the U.S., exhibit a lot of trust — trust between market participants who are both anonymous (they don’t know each other well) and who are self-interested.

If you look at the sharing economy, for instance — to a large extent, their success depends on their ability to create trust between third parties, trust between somebody who wants to rent out their apartment and trust between somebody who wants to rent that apartment.

Or if you think about yourself — every day, you trust people who you don’t know and you trust them to do things that are actually not in their self-interest. And more often than not, you don’t get disappointed.

If I told my wife that the U.S. economy exhibits a lot of trust, she would be very skeptical — rightly so because the history of corporate misdeeds is a long and distinguished one to which we’ve had many colorful, recent, new entries.

But the fact that people get ripped off is not really surprising. What’s surprising is that they’re not getting ripped off more often. What’s surprising is that I can go into essentially any store anywhere in the United States and be reasonably sure that I won’t be sold a lemon. That’s what’s surprising.

BUMPER: Is It Naïve to Invest in Trust?

Firms do so in two ways, both of which involve making it costly for themselves to break their promises in the future. The first is that they hire people and are run by people who don’t just care about profits but also care about being trustworthy.

There’s essentially people, if you want, who incur a psychic cost if they break their own promise.

Now, in an age in which many emphasize the cutthroat nature of business, this may sound naïve and quaint, but it’s not, because, in a market in which trust is important, being trustworthy gives you competitive advantage.

A historical example of this are the Quakers in the 18th century, who played a very important role in the British economy at the time, even though there’s only a relatively small number of them.

And it’s often argued that one of the reasons for why they had such an important role in the economy was precisely because they were known to be trustworthy; they were known to follow through with their promises, even if it was not in their immediate economic interest to do so.

And that’s what gave them a competitive advantage; that’s why people seek them out to trade with them.

We see the same thing today with firms like Keller Williams and the like, trying to hire people who are not just skillful but also what they call “ethical.”

I don’t think that that’s just a cheap PR stunt; I think firms try to hire trustworthy employees not just because it’s a moral value that they might care about but because it’s an economic asset in which they can earn a return.

The second is that firms commit themselves to a long-term strategy that emphasizes and importance of repeat in future business — because if I’m not just a pop-up store but I also care about future business, then there’s a cost to me of breaking my promise to you today, which is that there’s going to be less business for me in the future.

So, repeat transactions can serve as a commitment device. For this to work, though, two things have to be true: First, not only me but also my employees have to care about the future enough.

And so, it’s important that I’m providing them with the right kind of incentives — with long-term incentives and not just short-term incentives.

And the other issue is that transparency is important. It’s important that customers are able to observe how I’ve treated other customers in the past.

So, that’s why things like feedback mechanisms in the electronic marketplaces are really useful because, there, if I cheat you, you’re going to go online and write a review, and that’s going to be costly to me. And because I know that, I’m less likely to cheat you in the first place.

BUMPER: When It’s Unwise to Trust

I think it’s rational to trust firms that care about the future, and it’s foolish to trust firms that don’t care about the future.

For instance, it’s foolish to trust a pop-up store. A pop-up store is not going to be around tomorrow, so they have no incentive to keep any promises they are making to you.

Maybe less obviously, firms that are close to bankruptcy — those are run by managers who care much more about today’s profits than about future profits because if they don’t increase today’s profits, they’re going to be out of business in the first place.

Another example would be firms in which employees are being rewarded very strongly for short-term performance — for quarterly earnings or quarterly performance — because, again, decisions are then made by employees who care a lot about the present profits, and they care much less about future profits.

So, again, these are the kind of firms in which I’d be suspicious about whether or not they’re going to keep their promises.

Impacting Patient Outcomes Across the Value Chain of Lab Medicine

Contributor / Vahe Ayvazian
Vahe Ayvazian Diagnostics Institutions and Context,Broken Trust,Reputation Management,Healthcare,Communication I'm the Director of Marketing on our U.S. diagnostics business at Abbott, and before that spent 12 years at Procter & Gamble in various marketing roles from healthcare to beauty care, in U.S. based roles, global roles and customer roles.

As you think about the diagnostics industry overall, in the most simplistic sense, it's when you get a lab test done. It's a vital industry. One of the statistics that's talked about all the time within the industry is that 70 percent of clinical decisions are based upon a lab test.

So, when you think about the decisions that clinicians and physicians make every single day, ultimately the majority of those are based upon lab data. I would say that the lab industry takes enormous pride in the quality of the re sults that they provide.

From the physical specimen and how it's processed all the way down to the report generation that goes in there, you could argue within the entire healthcare system there is nothing that is more efficient today and more accurate from a repeatable standpoint than the laboratory testing.

Bumper: The Role of Trust in the Lab Medicine Value Chain

As we think about trust in the industry for diagnostics, it really has been deemed as a manufacturing site. So, when I would ask physicians, when I asked people in the lab, even hospital executives what can the lab do better, and what I hear consistently is increasing the turnaround time of the result and reducing costs.

For me the light bulb really went off that the lab truly is seen as a manufacturing site, and it takes great pride in that, and it should. From that operational efficiency that it can provide. For me, it's a cultural piece within healthcare institutions, and it's a cultural piece within society, as to how much do we really think about it and even care what our laboratories are doing everyday.

They've just been so good at such a small part of their job that there is just enormous trust to say that: yes I'm ordering a test and that result will be accurate. But, again it becomes the question of what did the laboratory, and what did that head of pathology, do to actually ensure that, that physician was interpreting those results correctly or even ordering those right tests.

That is a conversation that in most institutions today isn't happening. The lab is trusted to provide accurate results, but they're not trusted, or quite frankly enabled, to have that conversation where they can provide value in a much deeper way across the value chain of lab medicine and ultimately impact the patient outcomes.

Ultimately, when you think about some of the news of negative results right now, where the assumption was from some companies doing lab testing that the results were accurate when they actually weren't.

People's lives were truly put in danger because the wrong clinical decision was being made based upon the diagnosis from the lab tests. I would flip it to say how do we turn that into a positive thing, and how can we begin to have a conversation as a society, and across our healthcare system where we begin to talk about the importance of, and the pride that should be taken in, the high quality testing that's being done, and the right test being done at the right time.

We want to shift the lab from being a manufacturing site to being a clinical decision support center, and that in many ways is the broader vision that we're trying to drive. Abbott can play a part within that vision, but ultimately we're just a small piece of the larger vision that we're trying to drive for the lab and also for the broader health system.
Although credit reports adequately quantify trust, they are not necessarily the best thing to base relational trust on.

Jacked Up Ratings: Problems with Quantifying Trust

Contributor / Bruce Carruthers
Bruce Carruthers Sociology Credit,Government,Measurement,Sharing Economy BUMPER: Jacked Up Ratings: Problems with Quantifying Trust

One of the things that happens is, as we rely on quantitative measure of underlying features, like a quantitative measure or score that measures somebody’s creditworthiness or how trustworthy they are.

As these scores become consequential, as people start to take them seriously, and as they are used in actual important decision-making, there’s an incentive for people to corrupt them, to game them, to stop paying attention to what it is they’re measuring and instead focus on the measure.

And there are a couple of really clear examples of this becoming a big problem.

And one was, in 2008, people realized that the bond rating scores that had been attached by Moody’s and S&P and Fitch and whatnot, and that were attached to asset-backed securities based on subprime mortgages.

That the investment bankers and the rating agencies worked together to try to jack up the ratings as high as possible so that whenever outside investors looked at a security, they saw, “Oh, it’s AAA. Well, that’s great.”

Had they been savvy (and now they’re very savvy because they know what the problem is), they might have realized that, in fact, that AAA rating was a score that was kind of jacked up.

And so, I think in a world in which the quantitative information becomes increasingly important, what you have to do is be a sophisticated consumer of numbers and always be mindful of their limits and vulnerabilities. And you simply cannot take them too seriously.

BUMPER: Re-Engineering Trust with Peer-to-Peer Lending

Peer-to-peer lending is a very interesting experiment that, again, takes advantage of the IT revolution.

It used to be that if you were going to do peer-to-peer lending, it was going to happen in your small hometown. Those were your peers.

Those were the people who could trust you, who knew about your business, who might be willing to lend to you or whose business you knew about and to whom you might be willing to lend.

And what we’ve done is, we’ve sort of disconnected what used to be the high correlation between social knowledge and geographic concentration.

And so, peer-to-peer and similar models are re-engineering some of the differences between relational lending and relational trust and generalized trust in very interesting ways.

It’s a re-articulation of the connection between personal and impersonal. It’s a way of saying, “We can personalize what would otherwise be a default impersonal situation. We can create peers out of people that aren’t even in the same country.
Implementing trust and transparency into company strategy helps create solutions.

Learning from A Bankruptcy Crisis: Trust and Transparency

Contributor / Jennifer Thompson
Jennifer Thompson Public Relations Vulnerability,Communication,Transparency I worked with a client that was in a senior-living facility in a very populated metropolitan area who had gone through a number of leadership changes in the past couple of years.

There was suspicion and there was a basic lack of trust amongst “management” for this organization. One of the things that the new management team and the CEO realized quite quickly was that the financial situation of this organization was such that they needed to declare bankruptcy in order to restructure their financial agreements and get themselves out of the rut.

And in doing so, they were quite concerned how the term “bankruptcy” would go over with their residents, senior citizens.

So, our goal in working with the management team and the CEO was to create a situation, which, first, built some trust amongst residents and other stakeholders, and then, second, conveyed the facts about the bankruptcy filing and the new financial structure going forward in a way that would not cause residents to flee in droves and would continue the stability of maintaining majority occupancy of this particular center.

Previously, other management teams had had a fairly generic approach to communication, sending out form letters and such to residents but not really taking the time to engage individually with residents and others that matter.

So, we sat down and I worked with the CEO to map out the universe of folks that “mattered” in this regard — not just the residents but their families, the media, certainly the investors and financial community, and then, to some degree as well, other governmental organizations that may or may not play a role in the bankruptcy filing going forward.

But certainly, first and foremost, were the residents and their families. It was interesting because we found that their families were a key constituency who hadn’t been communicated with prior to this particular engagement.

So, we led up to a town hall meeting, which then served as sort of the anchor to state the path forward, again, conveying facts, first and foremost. The CEO herself delivered the message, stayed available for questions and commentary and interaction with the residents afterwards.

And there was some hesitation at first, but the fact that the CEO was willing to lay everything on the line and put herself in a little bit of a vulnerable position helped the residents and the stakeholders build their trust in her because they say that she was really trying to do the right thing and be open and forthright about everything that was going on with them and would be available to be communicating with them about every step in the process along the way.

The first thing folks are often concerned about is, “Let’s get the press release right, and let’s reach out to our consumers,” potentially, and then the investors, of course, as well.

But oftentimes, as you say, when you dig a little deeper, there are other stakeholder groups out there that can be tremendously influential in helping build and foster the trust that you have with your core constituencies.

Those are relationships that companies and institutions should be building, of course, before the crisis hits because you want to have those relationships in place — and those trusted advisors that can speak on your behalf — before you need them.

For the management company of this organization, I think they came through the experience learning three or four really valuable lessons. First of those is that communication with their residents and other stakeholder groups that is tailored to the specific group is imperative for building trust.

They couldn’t just come in and have a blanket, one-size-fits-all approach to communications in general, which was what previous leadership had done.

The second thing that they learned was that being tremendously transparent, conveying facts, and being open and honest was a way that was very important for them to build and gain trust with their stakeholder groups.

The third thing they learned was that they needed a communication strategy that wasn’t just focused on the bankruptcy filing itself and the immediate days surrounding that event, a communication strategy that continued weeks and months into the future to continually engage with their stakeholder groups.
Healthcare is an industry where measuring trust based on warmth just as much as competence can be beneficial.

Measuring Trust: Through Competence—or Warmth?

Contributor / Adam Waytz
Adam Waytz Psychology Breaches,Distrust,Government,Leadership,Measurement,Reputation Management,Social Psychology BUMPER: Trust and First Impressions

I think what the research suggests is that first impressions go a long way and that people are making a decision about, “Do I trust this person? Do I trust this organization? Do I trust this brand?” relatively immediately.

And furthermore, trust is very difficult to restore once it is breached.

BUMPER: Warmth vs. Competence in Gauging Trust

So, the work of Susan Fisk and others has shown that warmth really predominates judgments of trustworthiness, more so than competence.

So, the first and the most important thing that people are basing their judgments of trust on are, “Do I feel that this is someone that’s benevolent? Is this a person or a company or a brand that’s kind, that’s good, that I would like to be friends with?”

The problem is, in the world of business, people tend to focus on conveying competence.

When they want to restore trust or when they want to gain people’s trust initially, businesses tend to focus on competence: letting people know that they’re intelligent, that they’re capable, that they have the ability to act on whatever their intentions are.

Consumers and people in the world and just people who are engaged in social life care about competence second. They care about warmth first. This is also important for leaders as well.

Amy Cuddy and colleagues wrote an article in Harvard Business Review that I like to refer to which is called “Connect, Then Lead.”

Often leaders think that they need to convey their competence to the organization above all else. But the most important thing is first to connect with subordinates and peers and other executives on this dimension of warmth.

I think why we focus so much on competence in the world of business is that competence is much easier to measure. We can see performance ratings; we can see sales numbers; we can see return on investment.

Competence is something that is very visible, so we tend to focus on what is visible and what’s quantifiable.

Warmth is something that feels a bit squishier, a bit more abstract, and even a bit less quantifiable, yet warmth is what people are really thinking about when they’re judging, “Do I trust this person? Do I trust this organization? Do I trust this brand?”

Now, some companies and some organizations have gotten much better at quantifying warmth or quantifying things like social responsibility: “How much is my organization engaged in fair practices towards its workers? Positive interactions with the community? Benevolent actions towards the environment?”

And we can start seeing the emergence of the corporate social responsibility scores. I think this is a step forward in organizations trying to capture warmth in a more quantifiable manner and then conveying that to potential consumers who really care about these dimensions.
Too much institutional trust and you throw your money out the window.

Regulating Trust: Love It or Hate It?

Contributor / Kent Grayson
Kent Grayson Marketing Institutions and Context,Regulation,Reputation Management,Sharing Economy,Social Psychology BUMPER: Regulating Trust: Love it or Hate it?

When we think about trust in the marketplace, we’re usually thinking about trust between the buyer and the seller and, do I trust you enough to give you money so that when you give me a product or when you provide a service, that it’s going to be good?

But there’s another level of trust that exists in exchange relationships, and that’s trust in the context in which the exchange occurs.

There’s a lot of research on the relationship between institutional trust and individual trust, and some research suggests that the more institutional trust exists, the less people feel like they have to build trusting relationships, because they’re protected by the institution.

But there’s also research that suggests that the more we trust in institutions, that provides a useful foundation for building even stronger trust with exchange partners. And the jury is still out on which is true and which isn’t.

A lot of firms don’t like to be monitored by professional associations, and they don’t like rules and laws that keep them from doing things that they might want to do with customers, and those laws and rules can make companies be less efficient and less profitable.

But they can also enhance the trust that the customer has in the institutions that protect trust and without them, the consumer may not want to engage with firms in the entire category.

And this is particularly relevant for new industries. We hear a lot about the sharing economy. One of the problems about some companies that operate in the sharing economy is that these institutions don’t necessarily exist which protect consumers from these problems.

If you’re working in a sector where there isn’t institutional trust, you have to build your trust one person at a time. At the grassroots level. And it seems like, for some of the companies that are operating in the sharing company, that if they do that and they start to build a critical mass, then the critical mass of trust within a particular social network serves as a certain institutional trust.

BUMPER: When Trust Makes Things Too Easy

Based on the research that I’ve done with a colleague in the mountain climbing industry, it seems that as consumers, when we’re going about our daily decision-making process, we sometimes are willing to place faith in institutions without necessarily knowing what those institutions do and without investigating.

So, the FDA — people think, “Oh, well, I’m going to buy this new product because the FDA approved it.” But there are lots of people who think the FDA is not very trustworthy. And there are reasons to maybe think that in certain product categories.

But many people still sort of, almost without thinking about it—it makes things easy. As I mentioned, institutional trust makes things easy for consumers. They believe, “OK, well I can trust this,” when that trust is misplaced.

And the amount of implicit trust (let me put it this way), the amount of implicit trust that exists in the institution of guiding and maybe in the professional associations that monitor is amazing to me as someone who doesn’t climb mountains.

They say, “Well, I went to a website, and I found this person, and my friend says they’re good, so I signed up for them to give them 60,000 dollars, to have them take me to the highest peak in the world where I might die.” And they’re still willing to place trust.
A focus on interpersonal trust at Expo Chicago has been key to its revitalization and ongoing success.

Renewing Expo Chicago through Interpersonal Trust

Contributor / Tony Karman
Tony Karman Art and Culture Reciprocity,Institutions and Context,Building Brands BUMPER: Expo Chicago: A Trust Deficit

Trust is really the core of any transaction. You begin got build it with an individual as a possible business partner. You use trust as the foundation with which you build your reputation.

Expo Chicago is an international art fair of contemporary and modern art.

It convenes upwards of 140 international art galleries from 17-plus countries and 43 international cities. It convenes them for five days in Chicago at a venue that was international or renowned for hosting an art fair for many years and that’s navy pier.

The fair had slid in many ways to a place where the art world or collectors just didn’t bother to come.

What we had to do is enter back in at the highest of level, but prove and convince the world that we mattered right away.

BUMPER: Building and Utilizing Interpersonal Trust

Those relationships that you begin in your early career done right, if you are trustworthy and full of integrity in both words, deeds, and actions will carry for many years of whatever endeavors you’re doing.

And I think that that trust, that integrity, that work ethic and ethic in the way you do business allows success to be achieved.

Trust and honesty is how I was able to build a foundation even to raise money for the International Art Fair. Major business leaders, collectors, civic leaders in Chicago that I approached to back the fair before it was the fair gave me their support financial support not necessarily because they wanted to make money, because the deal is not a multi-million-dollar deal.

If one looks at a transaction how can I win all the time? I don’t think the long-term win is really possible, because after all, if both or several involved in that transaction aren’t finding a benefit from that then there is no long-term future. There is no win.

And trust really is at the core, because after all, you can’t do that for the long-term if you’re not both trustworthy or have presented that opportunity in a sphere of what I think is a trustworthy and open way.

BUMPER: Winning Trust through Institutional Support

I don’t think Expo Chicago would be without the trust or the support of not only the business community, the civic community, the cultural community, and most importantly the artists and the galleries and the cultural community of Chicago.

We know we were proud to have partnered with Jeanne Gang to design the fair. That was a statement of trust. That was a statement to the international art world that we were going to build an international art fair with the imprimatur and the stamp of a great internationally renowned architect.

I can spin or we can spin all we spin, but if the testimonial is coming from a trustworthy individual respected in their field, whether it’s a critic or a curator or a collector or an art dealer an influential art dealer, if they’re saying this is special or this is good or this is important, that sets a whole other layer of foundation for in my case an international art fair’s success.

I think that it’s a multi-cultural world, and clearly this is an international art fair that allows for 17-18 countries in 45 to 50 international cities to represent works from around the world. I would say building trust within that is no different than building trust as we’ve talked about individual to individual.

Trust in relationships, trust in partnerships, trust in vision, trust in those that were backing this fair, trust in the statements of support from our civic leaders, our mayor, our city departments, the collective of all of that allowed all of us working on Expo Chicago to present that first fair in a way that we knew was going to make a statement to the world and has continued to allow us to refine it, to grow it, to make it again a impossible fair to miss.

The Evolution of Trust in Bioethics

Contributor / Raymond De Vries
Raymond De Vries Bioethics Incentives,Trust and Data Bumper: Does the Field of Science Push Researchers to the Edge of Trustworthiness?

There’s a difference between trustworthy science and trustworthy scientists. The first one’s kind of easy: trustworthy science is a result of well-designed science carried out carefully according to procedure.

The second one is more about the person doing the science: Is that person trustworthy? Do they subscribe to the norms of science? For example, do they let their personal bias influence the way they find their results?

Those kinds of things are more difficult to regulate.

In fact, we found in some research that we did that the organization of science actually pushes scientists in ways that are more dishonest.

So, the intense competition for research funding, for example, means that scientists start to cut corners in their research, start to do things to make sure they get published, to make sure they get the next grant.

So, this excess of competition and the lack of a collaborative attitude about science really creates an environment that promotes untrustworthy science.

If you are a researcher, you need to understand how these forces in the field of science are pushing you to the edges of being trustworthy, and you need to reflect hard and long on doing good science and yet being successful as a researcher. And I know that’s a serious challenge.

Bumper: Caregivers versus Researchers: Conflicting Priorities in Building Trust

One of the particular challenges in medical research is balancing patient outcomes and research outcomes. And what’s interesting about this is that caregivers and researchers have different goals.

A caregiver’s goal is care for the patient—giving the patient the best care. A researcher’s goal is generalizable knowledge. So, their first goal is not making sure the patient has good care but making sure that good science is done.

And those goals can conflict. And what’s interesting about that is we have prospective review for research to make sure that researchers don’t let their goal of getting generalizable knowledge harm the subjects of research.

But clinical care, we have retrospective review because we trust that a clinician’s first goal is to help a patient, and if something goes wrong, then we have an ethical review.

We presume trustworthiness for clinicians. But the first goal of researchers is to science and not to patients.

A really beautiful example of this is in the movie Wit, where you see a perfect illustration of this tension between the goals of research and the goals of clinical care.

Bumper: Trust at the Intersection of Bioethics and Big Data

With the increasing use of big data, patients and research subjects really fear an invasion of their privacy.

They’re not really certain where their data are going and how they will be used and if somehow they’ll come back to haunt them, where an insurance company will find something out about you and raise your insurance rates or an employer will find something out about you and deny you employment because of your potential for illness.

Another thing we found is people are worried about how their data will be used. We did a study looking at if those kinds of things matter to people, and people said, “I don’t want my data being used for bioweapons research.”

People also said, “I don’t want my data being used by a for-profit company to make money that’s not shared with the public, because I’m freely giving them my data and they’re cashing in on my data for their own private ends.”

The answer to this, we think, is better governance of data banks and biobanks.
Trust and leadership are key elements to success.

Trust and Leadership

Contributor / J. Keith Murnighan
J. Keith Murnighan Management Leadership,Reputation Management,Social Psychology,Swift Trust,Broken Trust, Vulnerability Every leader wants to come across as competent. And what a lot of research suggests is every leader should also want to come across as warm — as interpersonally warm and caring.

So, this nice combination of competence and warmth is dynamite for leaders. It gets really positive responses from people who not only think you care about them but also understand that you know what’s going on. And that’s a powerful combination.

And if you’re a leader and have been appointed a leadership position for good reasons, people are going to think you’re smart and they’re going to give you some credit.

And think about this — think about leaders who will tell you, “You must earn my trust” versus leaders who say, “We’re starting out with 100 percent trust. You have a good track record. I’ve seen your reports. I have high expectations from you. You’ve been fantastic. Let’s take it from there” — altogether different from starting at ground zero.

BUMPER: Building Trust within Teams

When I work with companies and with leaders, I’m always focusing on the teams that they lead — the immediate groups of people that they lead. And what I want to have happen is for those teams to coordinate themselves well and trust each other.

And if they can coordinate themselves well and trust each other, they’re going to be able to take advantage of whatever abilities they have.

Add on some training programs where their abilities increase — absolutely tremendous bottom-line impact over the long term.

You can’t predict short-term — internal dynamics and their effect on the bottom line, in the short term, is not always obvious.

But in the long term, a really smoothly functioning team that’s well coordinated and trusts each other and has ability — whew! — fantastic.

BUMPER: Exploring Automatic Trust

Automatic trust is where you encounter someone, and for some reason, things click. And you find and believe that they’re trustworthy right away.

Our brains have all of these connections — interwoven connections in our brain — that activate when you say something like a person’s name or when they’re wearing a pair of glasses that you recognize that, for some reason, you have a positive association about.

So, automatic trust is a situation where you get a cue that all of sudden leads you to be more trusting than you would be otherwise. And there are lots of those cues that are possible.

BUMPER: Automatic Trust and Likeability: Creating Schemas

Liking is one thing, but we also have categories where a very likeable person is not particularly trustworthy. And we all know of them. They’re great to have a party with, but you would never loan them your car.

So, we’re pretty good at creating what we call “schemas” for different kinds of people. And we have schemas for professors; we have schemas for nerds; we have schemas for CEOs.

And we have schemas for people who are likeable but not trustworthy and schemas for people who are trustworthy but not so likeable.

Automatic trust can facilitate a better result, when you encounter one of the many, many people who truly are trustworthy, because if I come on as more trusting of you, you’re more likely to reciprocate and be more trusting of me. And we accelerate a trust-development process to both of our mutual benefit.

Trust as the Critical Component in the Complex Medical System

Contributor / Lynda Chin
Lynda Chin Healthcare Management Trust and Networks,Healthcare,Institutions and Context,Trust and Data,Transparency My name is Lynda Chin. I am, by training, a physician who has spent time in private practice, but spent most of my career in academic research focusing on genomics, cancer genomics, and really seeing firsthand how the advances in technology and science are impacting and dramatically changing the way medicine is practiced or will be practiced.

If we look back at a century ago, the relationship between the patient and the physician is very different. It was a relationship based on trust.

You have your family doctor for generations and you trust them, and they know you.

As medicine becomes more complex, as we understand biology more and we start to understand the complexity in medicine, the field has evolved to have many, many specializations.

So there’s no longer one single doctor who takes care of health. It is more likely tens and hundreds of doctors and nurses that are involved in our care.

I think to manage this complexity in medicine today we need to have our doctors work as one team so that there is still this one-to-one relationship, you know, from a patient perspective, that the system works together to help take care of the person’s health. That means that team of doctors who are most likely not even physically in the same facility need to be able to function as a single team.

That means they have to be able to share information, and they have to be able to trust each other. If they don’t trust each other, then the team breaks down. And that trust is predicated on, I believe, transparency.

Bumper: Transparency as the Foundation for Trust

When it comes to being able to make a decision I need to be able to trust that you have made the right decision.

That means I have to know what that decision is, what the context was when you made that decision, and all of this requires being able to get access to information. And that information isn’t just any kind of data. It has to be data that we can trust. That means how the data is collected matters a whole lot. I have to be able to interpret the data because there is a standard. So if there’s no standard, I can’t really use the data to create the sense of confidence that I can build on the data and the result you have generated.

So, I think to create the transparency which translates into confidence and trust, we have to have sharing of the data, we have to have standards so that we have confidence the data are collected properly, and then we have to have a standard so that we can compare from one to the next so that we know how we can interpret the data.

Bumper: Trust and Artificial Intelligence (AI)

Medicine has gotten more complex, the amount of data and knowledge have exploded, and I would say our human brain hasn’t gotten bigger. So we need help. That’s where AI, like analytics, comes in to not just help organize the data, but help interpret some of the data so that it generates actionable information to help an individual make decisions.

I see that AI has great potential to really impact the practice of medicine. Not to replace the human decisions, really, but to help interpret data that are not black and white. You know, there’s an art to medicine. A straight rule-based analytic is not going to help the physician, and that’s where the artificial intelligent-like or machine learning, or cognitive analytics come into play that are much more probabilistic. But, that also introduces another factor into trust. How do I trust that the AI system is making the right interpretation?

I don’t have a black and white answer. As the technology advances and matures, we will learn to use artificial intelligence more and more in the most appropriate way that can really help physicians deliver better care without taking that decision-making capability out of that human-trust relationship.
Kellogg professor Harry Kraemer outlines the four underlying principles of values-based leadership.

Trust as the Essential Ingredient in Influence: A Leadership Perspective

Contributor / Harry Kraemer
Harry Kraemer Leadership Leadership When one talks about leadership, sometimes people will say, "Well, I’d really love to be a leader, but I don’t have anybody reporting to me."

One of the key things about leadership is that leadership really has nothing to do with organizational charts and titles; leadership has everything to do with the ability to influence people.

And the only way you can influence people is you have to be able to relate to people.

And if you’re going to relate to people, the only way that’s going to happen is through trust.

The more trust that you can develop, the more you’ll be able to relate to people, influence people, and lead people.

And as I always remind folks, the people that are the leaders literally exhibit leadership long before, long before they have anybody reporting to them.

And I often tell the story that sometimes in companies, there’s this view of, "Boy, I’d really like to get started, but I can’t yet. We have to wait for some group of people.” You say, “Well, who do we have to wait for?"

Well, there’s this infamous group of people that seems to exist in most companies that get referred to as "those guys." There’s this magical group of men and women called "those guys we have to wait for."

And as I try to remind people who want to be leaders, when do you become a leader? You become a leader as soon as you realize, "I am one of those guys. I’m one of the men or women who’s going to make a difference.

"Why? Because I’m going to establish relationships based on trust and have an enormous impact on the organization regardless of my level, regardless of my title."

Bumper: 4 Ways to Establish Trust as a Values-Based Leader

From my perspective, if you’re the CEO of an organization—whether it’s 10 people or 50,000 people—you are one of the people (and I stress one of the people) responsible for building trust with customers, partners, suppliers.

As the former CEO of Baxter Healthcare, I would always get asked the question, "Boy, how do you deal with all these stakeholders? You have your team members, you have customers, you have suppliers, you have society, you have shareholders. Boy, there’s got to be a whole lot of conflicts between these."

My perspective is, if you’re a value-based leader and you’re focused on building trust, you actually realize these are not in conflict. In the bigger picture, it’s all in exactly the same direction.

To the extent somebody wants to be a value-based leader and really establish trust, my view is there’s four things that you need to focus on as a leader.

Number one, you need to become self-reflective. You need to start to think about, "What are my values? What do I stand for? What’s my purpose? What really matters?"

Number two, I have to focus on developing a balanced perspective. And when I say "a balanced perspective," many people have very, very strong opinions; the problem is they have virtually no understanding of other perspectives.

But the value-based leaders takes the time to understand all sides of the story. They establish trust because they demonstrate they really care about what each person has to say.

Number three, a value-based leader focuses on what I refer to as "true self-confidence." They know what they know; they admit what they don’t know; they’re a learning person.

And the fourth and final key part of being a value-based leader is genuine humility. In genuine humility, you realize every single person matters.

And if you want to establish trust in an organization, you don’t take the view, "Well, I’m a director level now. Well, these people are below me." No, nobody’s below you.

You as a leader are the person who’s below because you realize every single person matters. That isn’t just a nice thing to say; you actually believe it.

And to the extent you can make progress on becoming a little more self-reflective, establish more balance, have true self-confidence and genuine humility, your ability to build relationships and trust in the organization will truly put you on the path to becoming a value-based leader.
A breach in trust can destroy your work relationships.

Trust Breaches: Timing and Recovery

Contributor / J. Keith Murnighan
J. Keith Murnighan Management Breaches,Reputation Management,Social Psychology,Vulnerability,Reciprocity,Broken Trust We were interested in the long-term development of a relationship. And I’m an old fan of Hollywood movies, in particular, romantic comedies. So, Rosalind Russell and Cary Grant and His Girl Friday and a bunch of these movies.

When you watch them, it’s very easy to see that when there’s discord between the two stars early on, romance later is going to be supreme and fantastic.

One of the theories that we had was that if things are bad early, they may have a higher potential later on. Now, there’s an alternative way to think about it, of course — if things are bad early, they just don’t have a chance and they don’t go anywhere.

So, we actually tried to test the two, and we had interactions between people where there was a trust breach early or a trust breach after many cooperative choices.

And it turned out that the early trust breaches were devastating and led to less future cooperation, less trust.

When we saw breaches late, we thought that this might really, really damage things. It does immediately; it’s a shock when somebody breaches trust.

But our guess — and all we have is a guess at this point because we haven’t studied it enough — is that when someone breaches trust, they exhibit strength. And what happens with strength is we do respect it.

And when someone is trustworthy and strong — i.e., someone who’s trustworthy who doesn’t have to be — we tend to trust them more.

BUMPER: Overcoming a Breach in Trust

One of the things that should happen any time trust is broken is you should pursue and try and find out what happened, simply asking questions, because it can be the result of miscommunication, misunderstandings, a variety of things that are simple explanations that have nothing to do with a person’s trustworthiness.

However, if it was intentional, it tells you a lot about the person. And in business situations, what we find when there’s a serious trust breach, trust is gone, when it really comes to the crunch.

You might work with the other person; you might cooperate with them; you might have a beneficial relationship. But if you have to really trust them, it’s unlikely to happen.

BUMPER: Using the Rational Model to Decide Whom to Trust

The rational model suggests what rational people will do to benefit the most themselves. However, we’re not all completely rational, and we actually use very subtle cues and a lot of information to determine whether someone is trustworthy.

So, if you hire a lawyer, hopefully you’ve done some homework and you found out about that lawyer’s reputation, and that allows the trust process to develop more quickly.

Any time you trust someone, you’re vulnerable. You take the first step in whatever it is — sharing a secret, providing some information about a work project, or loaning money or a car. Any time you trust someone, you’re vulnerable.

The question is, how vulnerable do you want to make yourself?

The model tells you to be very cautious. And if you continuously get positive information, trust can continue to grow — again, to a limit.

At some point, things will level off because you don’t want to trust one person too much. It’s the old saying, “Too many eggs in one basket,” for instance.

In business situations, it truly pays to have many people you can trust a moderate to high amount and nobody you have to depend upon too much.

BUMPER: How Much Vulnerability? It Depends

How much do I actually want to loan my best friend? I’d be happy to loan him 5,000 dollars, 10,000 dollars. But when it starts to hurt me, can hurt me badly, do I really want to loan them 100,000 dollars? That would be tough.

In my classes, I often ask people, “Would you loan me 10 dollars?” And if they say yes, I say, “Would you loan me 20? Would you loan me 100?” There’s always a limit.

One time, I did ask someone if they’d loan me 10, and they said, “No.” I said, “How about 5?” They said, “No.” I said, “How about 2?” They said, “No.” I said, “How about 1?” They said, “Maybe.” That was a very cautious person.

Most of us are willing, with people we know, to take some risks. But there’s always a limit.
Employing more trust in leadership led to soaring sales for Oreos in the international market.

Trust in Leadership: 3 Lessons in Empowering Your Team

Contributor / Sanjay Khosla
Sanjay Khosla Consumer Products Leadership Blank checks is all about trust: trusting leaders to do the right thing, to take ownership, and yet be accountable for results.

How do these blank checks really work? There are three guidelines. The first is, you select the leaders whom you really trust (and the teams) and give them a really big target, let them dream big. And these targets have to be achieved in a very short period of time.

The second is, the leader and the team puts together a short business proposal, asking for the resources that would be needed along with clear deliverables and milestones.

And the third guideline is to nurture these teams, make sure that they have an environment where they can succeed, and then monitor progress against milestones.

BUMPER: Case Study: Oreo

Let’s take an example; let’s take the case of Oreo. Now, Oreo is the number one biscuit in the world by far. Oreo is over 100 years old. But for 95 years, Oreo was spectacularly unsuccessful outside the U.S. — and certainly not for a lack of trying.

So, we called the Oreo team, and we said, “We know currently it’s not doing well in countries like China and Indonesia and various other parts of the world — it’s not doing well. Just figure out what do you want to do, what resources do you want to use, take a blank check, and go.”

And then they realized, why is it that it’s not selling so well in various countries around the world, like China? And they found that, very often, the American Oreo was too sweet, too big, the price points were too different.

And they started experimenting, then, with a number of different products, like Green Tea Oreo, wafers. Half these products failed.

And that was okay. That was really okay because the whole idea here was to give them freedom within the framework of keeping the Oreo essence core around the world but then getting local products, which delight local consumers.

As a result of that blank check, Oreo went from a revenue of about 200 million dollars outside the U.S. to over a billion dollars in revenue in six years. More importantly, gross margins outside the U.S. were very healthy.

BUMPER: Three Lessons from Blank Checks

So, what are the lessons that one can learn from giving blank checks? And again, this is equally applicable to small companies and large companies.

The first is, you get people, you trust people, to do the right thing, and you make them act as owners. The second is that this signal of trust goes all over the organization, of empowerment, but yet they are accountable for results.

And the third is not all blank checks succeed; very often, they fail because if everything is going well, something’s horribly wrong. The important part there is, if a blank check experiment fails, not to penalize the leader or the teams, provided they’ve learned the lessons from the project.

That, again, is a signal of trust — trusting people always to do the right thing and making sure, then, you celebrate not only successes but also celebrate and learning from failures.

Over years of experimenting with blank checks, we found that, in companies, you have a choice: you can either be cozy, or you can trust people and get them to fly.
Employing more trust in leadership led to soaring sales for Oreos in the international market.

What the Sharing Economy Tells Us about Trust

Contributor / Brayden King
Brayden King Sharing Economy Legal Guarantees,Sharing Economy The sharing economy, people are asking other people to share important things with them—a home, a couch, a car, anything that you normally use personally for yourself.

And so, the risk is that if you’re sharing with somebody, they’re going to misuse it, they’re going to break your things, they’re going to do something that you don’t want to happen at your home.

And so, it really requires that people trust one another to take care of their personal goods, their services, and know they’re not going to take advantage of them.

So, trust, I think of as the grease that gets the wheels turning in the sharing economy. Without trust, it’s impossible for people to be—or, it’d be very difficult for people to actually give and share their personal items with one another, or their time.

Reputation is sort of this idea that “I can trust you because I know that other people have trusted you in the past.”

So, when you have a good reputation and it shows up in these rating systems, then people are more likely to trust one another and are willing to give of their time and home and car—whatever it may be.

And the people in the sharing economy have figured out very nice ways to get that reputation out there—they’ve created rating systems, they’ve created feedback loops.

And if you do something that would make you untrustworthy, it shows up pretty quickly in those rating systems.

Bumper: With Reputation and Trust, Who Needs Regulation?

Well, the sharing economy companies like Airbnb or Uber have really wanted to avoid being regulated as much as possible.

And the reason for that is because they feel like trust and reputation end up being proxies that keep people’s behavior in line and that if you try to overregulate it, it’s just going to increase costs and make it difficult for them to compete with regular services like hotels or taxi companies.

So, they really see trust and reputation as a proxy for regulation and making it unnecessary to do that at all.

Now, there’s clearly some people who are uncertain about that, and it usually arises when there’s a problem that occurs despite the fact that you have these reputational measures in place.

Take, for instance, Uber, which has had a history of complaints coming up where drivers have abused the privilege.

When something terrible happens, then obviously people begin discussing whether regulation would be a better alternative than simply relying on reputation and trust.

You know that if you are a user of Airbnb and you’re a guest at someone’s house, if you have a big party there and break all their stuff, then chances are it’s going to get reflected in your rating, your reputation, and there’s going to be a penalty attached to you, a stigma attached to you.

And in the future, it may be much more difficult for you to get the house, to get the room that you want.

So, typically, those things—reputation—make people behave well, and it makes them more trustworthy.
Trust and reputation play an important role in the conference room.

When Trust Expectations Clash

Contributor / Sanford Goldberg
Sanford Goldberg Philosophy Institutions and Context,Leadership,Regulation BUMPER: When Trust Expectations Clash

We expect certain things from our products. We expect companies to behave in certain kinds of ways, both in the production and also in the marketing of these products.

These are what I would call “normative expectations.” They’re expectations that aren’t predictions; they’re more in the vicinity of standards that we impose on the people with whom we interact. And, in that sense, they’re normative rather than predictive.

They certainly can be unreasonable. If you think about, for example, a boss — a boss might normatively expect all sorts of things regarding his or her employees. But if it goes beyond what is reasonable to expect of his or her employees — for example, the amount of hours worked, what can be accomplished in a given day, and so forth — those are what I would call “unreasonable normative expectations.”

It’s a good question how to deal with people who have unreasonable normative expectations. My impression is that a good part of life with other people is negotiating what counts as reasonable in these normative expectations.

And I think what to do will differ depending on the sort of circumstance that you’re in when you’re dealing with somebody with unreasonable normative expectations.

I think they clearly can be influenced, and they frequently do change. This is the stuff of culture; this is what our culture gives us. If you like, it’s our cultural inheritance.

So, depending on what culture you happen to be raised in, that will largely affect the kinds of normative expectations you have of other people and when you have those normative expectations of others.

So, how to influence these? That’s a question for culture management. If you find that there are normative expectations that are not, from your perspective, reasonable, you ought to try to affect those parts of culture that underwrite those expectations, that justify those expectations, and so forth.

After all, these are the sorts of things that are not visible with the naked eye but nevertheless are profound in their impact on how we relate to one another.

So, I can only imagine if a leader isn’t sensitive to these things, he or she is not going to be fully successful.

It’s a very, very complicated and delicate negotiation when two parties come to a situation with different normative expectations. And unfortunately, there’s no simple answer about how to do that; it’s a matter simply of negotiation.

BUMPER: How Reliable are Reputations?

If you think about our perceptions of another’s reputation, that’s really a kind of perception of how trustworthy they are. Do they do what they say they’ll do? When they tell us something, is it reliable, something that can be depended upon?

And I would say that there are two sources of information that we have. One source is whatever information that we happen to have on the particular person or company — the evidence that we’ve collected over time. And that can include evidence of what other people have said about this organization.

But, in addition, I think we’re greatly aided by our society’s institutional ways of ensuring and enforcing trustworthiness in others.

For example, if you happen to live in a community where being trustworthy is extremely highly valued and being untrustworthy is extremely disvalued, that will give individuals with whom you interact a great motive to be trustworthy, whereas if you live in other communities where those sorts of things aren’t valued or perhaps not enforced with the same regularity, that also can affect other people’s trustworthiness, and so have an impact on your perception of their trustworthiness.

So, in addition to your own onboard resources — the evidence that you have — you also have your society and its practices of generating and enforcing trustworthiness in its members.

Why Transparency is Critical to Creating Trust in an Organization

Contributor / Andrew Swinand
Andrew Swinand Leadership Leadership,Vulnerability,Communication,Distrust I believe a culture of trust today is more essential than it’s ever been. And we live in an interesting time. With digital technology we basically have full transparency to information. And I think there’s a higher expectation amongst individuals to know, to be included, to basically be part of the conversation.

"So I think as leaders today, more than ever, we need to have transparency to build trust in the organizations we lead. when I was starting out, you know, basically as an employee you had very little access to information.

Companies would do annual reports or their shareholder newsletter.

And I think that today, to attract and retain the best talent, people need to understand decisions."

Corporations need to embrace a greater level of transparency in terms of sharing information with their employees. companies that basically share this information are going to have greater loyalty, greater shareholder return, and harder working employees.

Bumper: Bad News: Painful but Necessary

If information is power, why would I not want to give more information to my people to make them as powerful as possible, to help our businesses grow, and to help succeed in the marketplace.

But then you have the converse, what if it’s bad news? What if this quarter what we’re sharing is potential layoffs or potential down side?

There was actually a child psychology study where they looked at children who were told and aware of issues, and then they had the parent come in and lie to them and basically tell them everything was okay. Everything’s fine, don’t worry about it.

And they studied and looked at actually children’s stress levels during this experiment. And ironically, when given reassurance, stress levels spiked. And the reason is people, children, are perceptive. They know when bad is happening. They see it in your face. They see it in how the organization carries. And what the study basically found was the spike was an erosion of trust.

People are aware of the bad. And if you’re not, as a leader, communicating, telling the story, managing information, people are gonna make up stories on their own. So my experience is while you do create distraction when bad occurs, it’s infinitely less than the distraction that would naturally occur in saying nothing.

Bumper: Embracing a culture of transparency: Listening to Employees

One of the ways we’ve actually tried to embrace a culture of transparency is to actually create and use tools to bet…get better input. And one of the things we’re using right now is actually a tool called Tiny Pulse. And Tiny Pulse is literally just that. It’s an electronic survey that we take on a weekly or biweekly basis of all our employees. And it’s questions of how happy are you, what’s preventing you from doing a good job, what are the things that basically give you energy

I think transparency is a two-way street. So using a tool like Tiny Pulse actually allows us to literally take the pulse of the organization and see what’s on people’s minds, what’s their concerns. The whole thing is anonymous. And for me as a leader to have the ability to then be able to address specific needs—you know, I think about it as sensing and responding to employees’ needs, wants and desires versus just announcing from a bully pulpit what I think is important.

The idea there of people sharing information, but then you as a leader responding to information with truthful, honest feedback creates actions that build trust, build longevity and build loyalty

I think that organizations that practice transparency, that earn trust, actually have a little bit more leeway to basically learn and evolve. So again, yes, there are challenges and there’s investment required to build trust and transparency. But the commitments in brand loyalty and employee loyalty I believe, and have seen, far outweigh all the investment that’s required.
Why We Need Trust In Negotiations

Why We Need Trust in Negotiations

Contributor / Jeanne Brett
Jeanne Brett Negotiations Swift Trust,Communication,Vulnerability BUMPER: Signaling Trustworthiness

I’d like to distinguish between swift trust and slow trust. Swift trust means I don’t know you—I may not even know you by reputation—but I assume you’re a professional. I assume that you are benevolent; I assume that you’re trustworthy.

And I signal that information to you. And then you come back to me, usually, by reinforcing me and indicating that, yeah, I made the right call about you. It’s hard to not fulfill someone’s trusting expectations of you.

In slow trust, there’s no assumption that the other party is trustworthy. In slow trust, it’s slow; it takes time to develop trust. What that means is, people have to have experience with each other, gain familiarity with each other, have that experience where I make myself a little vulnerable and you don’t take advantage of me.

Slow trust builds slowly over time. Swift trust happens quickly. One is just more efficient than the other in negotiations. So, it’s understandable that many people are reluctant to take the swift-trust risk.

BUMPER: Positive Outcomes with More Trust & Vulnerability

Two sisters are both in the kitchen; they’re both cooking; and they have need for an orange. And they only have one orange.

So, the sisters get into a fight: “I want the orange.” “No, I want the orange; you can’t have the orange.” And there’s no solution because half an orange is not going to satisfy either sister.

They get nowhere until they take that single issue of who gets the orange and say, “Why do you want the orange?” And then they learn that one sister wants the orange for the rind, and the other sister wants the orange for the juice.

Now, if they had just taken half an orange, neither one of their recipes would have come out. But by finding out why they wanted the orange—those are those interests in negotiations—they were able to both win, if you will.

What happens is, in negotiations—even if it looks like it’s a single issue, or many negotiations are multi-issue—what you have to understand is where the other party is coming from, what’s motivating the other party, what’s most important to the other party.

You’re not going to get everything you want in negotiation; you’re too interdependent for that. But if you find out what’s more important to the other party that’s somewhat less important to you, then you can begin to make a trade-off.

So, why do negotiators need to trust?—because as soon as I start revealing what’s important to me, you have the opportunity to take advantage of me.

So, I have to trust you that you won’t take advantage of me, which means we coach negotiators to share a little information about interests and priorities, ask for some information—comparable information—in return.

And then you can get this reciprocity going—sharing information—understand where the other party is coming from, make those trade-offs, and build high-quality agreements, like the two sisters and the orange.

Other pages in Videos:

Pages in The Trust Project at Northwestern University