Individual trust is not rational even where group-wide trust would benefit all

Evidence

Contemporary writing on trust is sometimes afflicted with reasoning from the fallacy of composition. We commit this fallacy whenever we suppose that what is true of a group or set is similarly true of the members of the group or set or vice versa. A commonplace argument in the trust literature is that we would all be better off if we were all more trusting, and therefore we should all trust more. If we found a society in which distrust was endemic, we might readily conclude that its members would all or almost all be better off if we could somehow lead them to be more trusting, perhaps by creating institutions that would substitute for trust while educating them to be trusting. Yet we should still recognize that it would not be in the interest of an individual in that society simply to start acting as though he or she trusts. — Russell Hardin, Trust and Trustworthiness, 459

Categorization

• XREF: Echoes the one-shot cheating equilibria from Milgrom et al. the reader has already engaged — individual defection remains rational absent institutional guarantees.