Sunday, May 16, 2010

Trust is good

Being born in catania (Italy), I have always found fascinating that, in flourishing countries, trust is embedded in business transactions, and generally taken as granted by both parties. As a result of that you might think that in such a framework there would be plenty of opportunities for a ruthless person to exploit the situation. In reality, the fact is that being nice and trusting delivers a much higher payoff. It promotes industriousness and increase the number of interactions among business companies. In an iterated prisoner dilemma distrusting is a logical option (the so called Nash equilibrium), but trusting is a winning option. Morality and super-rationality (against the rational behavior of always mistrust) can lead to very positive outcomes, even in social science and economics.