Effects of a Trust Mechanism on Complex Adaptive Supply Networks

This paper models a supply network as a complex adaptive system (CAS), in which firms or agents interact with one another and adapt themselves. And it applies agent-based social simulation (ABSS), a research method of simulating social systems under the CAS paradigm, to observe emergent outcomes. The main purposes of this paper are to consider a social factor, trust, in modeling the agents' behavioral decision-makings and, through the simulation studies, to examine the intermediate self-organizing processes and the resulting macro-level system behaviors. The simulations results reveal symmetrical trust levels between two trading agents, based on which the degree of trust relationship in each pair of trading agents as well as the resulting collaboration patterns in the entire supply network emerge. Also, it is shown that agents' decision-making behavior based on the trust relationship can contribute to the reduction in the variability of inventory levels. This result can be explained by the fact that mutual trust relationship based on the past experiences of trading diminishes an agent's uncertainties about the trustworthiness of its trading partners and thereby tends to stabilize its inventory levels. Complex Adaptive System, Agent-Based Social Simulation, Supply Network, Trust