CInSt Research Seminar "Trust, Affinity, and Information": Alexey Makarin (Einaudi Institute for Economics and Finance)
Alexey Makarin (Einaudi Institute for Economics and Finance) is going to present his paper "Trust, Affinity, and Information" on regular CInSt research seminar on March, 25
Mutually beneficial trades often rely on both trust and trustworthiness. In exchanges where no history of behavior is observable, however, where does trust come from? Recent evidence suggests that the level of affinity parties in an exchange feel for each other positively affects trustworthiness and can, therefore, affect trust. We propose a simple model that predicts a positive relationship between trust beliefs, affinity, and trustworthiness and a negative relationship between the dispersion of trust beliefs and affinity level. Furthermore, the model suggests that trust should be slower to update after a shock to trustworthiness when affinity is high. We show that the model's predictions are supported by data from two unrelated datasets—a proprietary survey of Italian entrepreneurs and an extensive international survey (Eurobarometer). Finally, using data on international trade, we show that, in line with our model, adverse shocks to trustworthiness cause a reallocation of trade from low-affinity to high-affinity partners, and especially so in trust-intensive industries.
Time: 18:10-19:30 (UTC+3).
Location: Online in Zoom
Working language: English.
The link to join Zoom: https://zoom.us/j/7488279147
Here is the instruction about how to join the seminar in Zoom:
Information about the speaker