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Social Networks and Trust


Social Networks and Trust discusses two possible explanations for the emergence of trust via social networks. If network members can sanction untrustworthiness of actors, these actors may refrain from acting in an untrustworthy manner. Moreover, if actors are informed regularly about trustworthy behavior of others, trust will grow among these actors.
A unique combination of formal model building and empirical methodology is used to derive and test hypotheses about the effects of networks on trust. The models combine elements from game theory, which is mainly used in economics, and social network analysis, which is mainly used in sociology.
The hypotheses are tested (1) by analyzing contracts in information technology transactions from a survey on small and medium-sized enterprises and (2) by studying judgments of subjects in a vignette experiment related to hypothetical transactions with a used-car dealer.
The book is of interest for academics in various fields within economics, sociology, and political science such as game theory, organizational behavior, social networks and rational choice theory.

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List of Figures List of Tables Preface 1.INTRODUCTION: EMBEDDED TRUST 1.1Examples 1.2Trust 1.2.1Defining Trust 1.2.2Trust in Isolated Encounters 1.2.3Trust in Repeated Transactions 1.2.4Trust in Social Networks 1.2.5Arrangements to Reduce the Trust Problem 1.3Research Questions 1.4Overview 2.SOCIAL NETWORK ANALYSIS AND GAME THEORY 2.1Social Network Analysis 2.2Game Theory 3.A GAMETHEORETIC MODEL FOR CONTROL EFFECTS IN SOCIAL NETWORKS 3.1Introduction 3.2Construction of the Model 3.3Solution of the Model 3.4Properties of the Solution 3.5Approximation Using Linearization 3.6Approximation Using Simulation 3.6.1Methods 3.6.2Analyses for Simulated Data 3.7Substantive Implications 3.8Discussion
xi xiii xv 1 1 5 5 9 10 15 23 26 29 31 32 42
53 53 55 62 66 71 74 74 78 86 89
4.ASTOCHASTIC MODEL FOR INFORMATION DIFFUSION IN SOCIAL NETWORKS 4.1Introduction 4.2The Model 4.2.1Assumptions and Main Theorem 4.2.2Diffusion Times and Centrality Measures 4.3Analytic Results for Diffusion Times 4.4The Simulation 4.4.1Methods 4.4.2Analyses for Simulated Data 4.5Substantive Implications Related to Trust 4.6Discussion 5.CONTRACTING IN INFORMATION TECHNOLOGY TRANSACTIONS: A SURVEY 5.1Introduction 5.2Data and Hypotheses 5.2.1Description of the Data 5.2.2Operationalizations 5.2.3Summary Statistics of the Variables 5.2.4Hypotheses 5.3Analyses 5.3.1Methods 5.3.2Tests of the Hypotheses 5.3.3Interpretation of the Network Effects 5.4Conclusions and Discussion 6.BUYING A USED CAR: AN EXPERIMENT 6.1Introduction 6.2The Vignette Experiment 6.2.1The Setting 6.2.2Independent Variables 6.2.3Method of Paired Comparison 6.2.4Vignette Selection 6.2.5Subject Characteristics 6.3Data Collection 6.4Analyses 6.4.1Methods 6.4.2Tests of the Hypotheses 6.4.3Presentation Effects 6.4.4Subject Effects 6.5Conclusions and Discussion
93 93 96 96 101 104 109 109 112 119 121
125 125 130 130 132 142 143 146 146 147 152 158
163 163 166 166 167 170 173 177 178 179 179 181 185 186 187
7.SUMMARY AND NEW PERSPECTIVES 7.1Results 7.2Discussion 7.3Suggestions for Further Research Appendices A–Mathematical Details B–Network Construction Methods for Valued Networks C–Information on the MAT95 Questionnaire D–The Vignette Experiment References About the Author Author Index Topic Index
191 191 198 204
213 213 225 229 235 245 261 263 267