Chapter 5: Failures
Earlier chapters indicated that trust may fail. It has its errors and pathologies, in both lack and excess of trust. This is further discussed in the ﬁrst part of this chapter. Pathologies of trust have implications for economic systems. Those are discussed in the second part. The question for this chapter is: Question 9: Failures of trust How can trust go wrong? What are its possible adverse eﬀects? What are the limitations and boundaries of trust? 5.1 ERRORS OF TRUST First I look at errors of trust on the level of individual people and organizations. A question before I start discussing pathologies is the following: from whose perspective is it a pathology? If people make themselves vulnerable by large trust, who is to judge that this is excessive? Of course, this is up to the individual. However, without committing oneself to full-ﬂedged economic determinism, one can reasonably speak of what is risky from the perspective of the survival of the ﬁrm, depending on the intensity of competition. Blind, unconditional trust is excessive in the sense that it entails a large risk of economic and possibly also psychological damage, and a possible threat to survival of the ﬁrm. If for reasons of conviction or mission one goes ahead anyway, that is a respectable choice. However, as we shall see, excess of trust and suspicion may be due to psychological or organizational problems, which, when recognized, may be seen as undesirable and in need of remedy. Pathologies and Errors As...
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