Trust and arena size: expectations, institutions, and general trust, and critical population and group sizes

Abstract

While trust and group size in socio-economic processes have been well investigated separately, approaches to synergize them have been rare. After addressing basic conditions for institutionalized cooperation, the agency capability of preferential mixing is introduced in order to determine the carrier group of an institution of cooperation. That platform typically assumes a meso-size smaller than the initial arena. Habituation and generalization within and across overlapping platforms then may lead to first contextual trust. This has to be carried over from individual platforms into the larger public of the whole economy to constitute general trust. The practical relevance of this analysis is illustrated through the fact that even superficially similar economies show different socio-economic performance and trajectories. Our results suggest investigating their inner deep structure of overlapping meso-sized platforms as a critical factor.

To Trust or to Control: Informal Value Transfer Systems and Computational Analysis in Institutional Economics

“…The model provides an openly available computational platform, on which the relative effects and interactions between trust, control, and other "framework" factors, their temporarily changing patterns of complementarity and substitutionality, and thresholds and bottlenecks for the emergence, stability, and performance of the system can be explored. Thereby, it also helped corroborating propositions about the importance of other complementary factors, such as 14 forgiveness or adequate arena sizes for the emergence of institutionalized cooperation (Elsner and Schwardt 2013).…”

Policy and state in complexity economics

“…And when it comes to emergent structure and (cumulative) downward feedback ('macro foundations of micro'), the limits of analytical tractability and determinacy are quickly reached. Often it is also appropriate to focus on some 'meso' level (considered below the size of the entire 'macro' economy or population, as a constituent component of them), since informal structural emergence often occurs prominently at 'mid-sized' arenas, due to better cognitive and expectational conditions there (Elsner and Heinrich 2009;Dopfer 2011;Elsner and Schwardt 2014).…”

“…Generating proper meso arenas would help to better meet cognitive capacities and increase private problem-solving capacities (Loasby 2012;Charness and Yang 2014). Many analytical, empirical, simulation and lab approaches have shown that smaller arenas within larger topologies promote recognized interdependence and futurity, and with this the quality of private decisionmaking (Richards 2012;Mirowski 2013;Vega-Redondo 2013;Elsner and Schwardt 2014;Kao and Couzin 2014). This also applies when agents can make voluntary location choices, that is, spatial partner selection (Berninghaus et al 2013).…”

The micro—macro link in heterodox economics

“…The emergence of novelty can be most intuitively illustrated for the case of innovation, which was a key element in the work of Joseph A. Schumpeter. Schumpeter distinguished between five types of innovation (Schumpeter 2011(Schumpeter [1934 Another venue of work in this context aims for a refined conception of "meso" in economic analysis (Dopfer et al 2004, Arthur 2015, Elsner & Schwardt 2014. Proponents argue for a "micro-mesomacro" framework as a substitute for the conventional micro-macro dichotomy.…”

“…More recent examples for heterodox approaches compatible to a systemist perspective are supplied by an understanding of economics as the study of the social provisioning process (Jo 2011) or the postulate of evolutionary economists to focus on the meso-level of economic activity (e.g. Dopfer et al 2004, Elsner et al 2014. In sum, these observations suggest that heterodox economic approaches serve as natural candidates for illustrating a systemist approach to social and economic issues and, conversely, systemism serves as a natural candidate for epistemologically substantiating heterodox economic research.…”