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Trust and economic organisation
Author(s) -
Ricketts Martin
Publication year - 2001
Publication title -
economic affairs
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.24
H-Index - 18
eISSN - 1468-0270
pISSN - 0265-0665
DOI - 10.1111/1468-0270.00270
Subject(s) - reputation , outcome (game theory) , unintended consequences , government (linguistics) , business , production (economics) , industrial organization , blind trust , government regulation , public economics , law and economics , market economy , public relations , economics , microeconomics , political science , law , linguistics , philosophy , china
Markets induce trust through repeat dealing and the development of reputation. Organisations economise on the use of trust through the appropriate assignment of ownership rights. Trust is not therefore simply a useful‘outside’entity which economic analysis takes for granted. The production and‘allocation’of trust are, at least partially, an outcome of the operation of the economic system. An important‘unintended consequence’of government regulation which does not attract sufficient study and comment is the implicit undermining of trust‐inducing market mechanisms and organisational structures.