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Trust me, I’m an economist

The New Bazaar

CHAPTER

Are Trust and Contracts Complements or Substitutes?

Research asks the question, are trust and contracts complements or substitutes? Or do contracts enhance trust, or to contracts replace trust? Exactly. And we see this in a couple of ways, right? So one thing you see is that if you look at actual contracts, you find that they often leave things unspecified. If everything's too spelt out, you basically just show that youe not, you don't trust that person at all. It can actually od the trust that does exist, because it sends a signal that you're not actually willing to be vulnerable.

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