Case of the Day: Trust in economic transactions
All of us in modern economies make daily transactions in which valued goods or services are transferred from one person to another. Chapter 2 of Dasgupta's Economics: A Very Short Introduction focuses on the trust relationships that are necessary for those transactions to occur. In order to read that chapter, you had to obtain access (at least temporarily) to a copy of the book. In this case study, we consider the trust relationships involved in the transaction(s) that enabled you to read Dasgupta's book.
1. How did you get access to Dasgupta's book (e.g., buy at bookstore, buy elsewhere, borrow from library, borrow from friend, etc.)? Who were your "counterparties" on the other side of the transactions involved in obtaining access to the book? How, if at all, did you compensate the counterparties for your (temporary or permanent) use of the book?
2. In what ways did you have to trust the counterparties to your transactions? In what ways did the counterparties have to trust you? (Think of all the things that could have gone wrong if one party was not trustworthy.)
3. How did you and your counterparty achieve the degree of trust required for a successful transaction? In other words, what legal, social, or other institutional mechanisms facilitated the establishment of trust in this case?