Multiple equilibria mean historical accidents determine which trust regime emerges
Evidence
The second weakness is that the strategies I sketch for the various participants are not the only credible ones. It follows that the outcome I describe is not the only viable one. There are other, equally credible, sets of strategies that result in outcomes which do not have this form of reputation acquisition, where transactions are not undertaken for a great many periods. In short, such repeated games possess more than one equilibrium outcome (see Fudenberg and Maskin 1986). There is therefore no guarantee that the one I have outlined will prevail. It is here that historical accidents may matter. — Diego Gambetta, Trust - Making and Breaking Cooperative…, 1008
Categorization
Category: Causal Relationships
- XREF: Historic-accident path dependence parallels Saramago’s contingent collapse: which equilibrium (trusted order vs. Hobbesian predation) prevails is not preordained but depends on chance events.