The Condition for Generous Trust

Trust has been considered the "cement" of a society and is much studied in sociology and other social sciences. Most studies, however, have neglected one important aspect of trust: it involves an act of forgiving and showing tolerance toward another's failure. In this study, we refer to this concept as "generous trust" and examine the conditions under which generous trust becomes a more viable option when compared to other types of trust. We investigate two settings. First, we introduce two types of uncertainties: uncertainty as to whether trustees have the intention to cooperate, and uncertainty as to whether trustees have enough competence to accomplish the entrusted tasks. Second, we examine the manner in which trust functions in a broader social context, one that involves matching and commitment processes. Since we expect generosity or forgiveness to work differently in the matching and commitment processes, we must differentiate trust strategies into generous trust in the matching process and that in the commitment process. Our analytical strategy is two-fold. First, we analyze the "modified" trust game that incorporates the two types of uncertainties without the matching process. This simplified setting enables us to derive mathematical results using game theory, thereby giving basic insight into the trust mechanism. Second, we investigate socially embedded trust relationships in contexts involving the matching and commitment processes, using agent-based simulation. Results show that uncertainty about partner's intention and competence makes generous trust a viable option. In contrast, too much uncertainty undermines the possibility of generous trust. Furthermore, a strategy that is too generous cannot stand alone. Generosity should be accompanied with moderate punishment. As for socially embedded trust relationships, generosity functions differently in the matching process versus the commitment process. Indeed, these two types of generous trust coexist, and their coexistence enables a society to function well.