Trust and wealth

Official URL: http://192.168.1.20/record=b1266204 (Table of Contents)

This thesis studies the relation between wealth and trust in a model where the ability to elicit trustworthiness from unrelated people depends on own wealth as well as the wealth of other agents in the economy. Betray of trust leads to an enforcement stage. In equilibrium, rich people trust and betray when matched with a relatively poor agent, while the poor do not trust, and betray if matched with low wealth agents. A constrained equilibrium is characterized in which agents devote all their wealth in the enforcement stage, therefore, wealth changes directly influences the equilibrium resources. A betray region (combinations of wealth levels) in which all agents are untrustworthy is identified and characterized. Redistribution of wealth concentrated on the betray region is more likely to induce a zero trust equilibrium.