THE SOCIAL-STRUCTURE OF TRUST

This paper addresses the way in which the level of trust in cooperativ e relations depends on network structures. The study is an elaboration of models developed in earlier papers using iterated games [Weesie, J ., Buskens, V., Raub, W., 1998. The management of trust relations via institutional and structural embeddedness. Journal of Mathematical Soc iology (in press); Buskens, V., 1995. Social Networks and the Effect o f Reputation on Cooperation. ISCORE Paper No. 42, Utrecht University]. We distinguish individual and group network measures. Applying a comb ination of approximation methods to the game-theoretic solution to the model, we derive hypotheses on the effects of density, outdegree cent rality, and centralization on the level of trust a truster can have in a trustee. We conclude that higher density and outdegree induce more trust. Centralization increases trust if it is 'well organized,' i.e., actors who can place more trust are central in the network. Furthermo re, we discuss theoretical evidence that the relative importance of de nsity compared to outdegree increases if the trust problem at the dyad ic level is large. Finally, we show that, in many situations, a few si mple network measures explain most of the effects of the network struc ture as a whole. (C) 1998 Elsevier Science B.V. All rights reserved.