The cost of trust: A pilot study

Novak, M, Potts, J and Davidson, S 2018, 'The cost of trust: A pilot study', The Journal of the British Blockchain Association, vol. 1, no. 2, pp. 1-7.


Document type: Journal Article
Collection: Journal Articles

Title The cost of trust: A pilot study
Author(s) Novak, M
Potts, J
Davidson, S
Year 2018
Journal name The Journal of the British Blockchain Association
Volume number 1
Issue number 2
Start page 1
End page 7
Total pages 7
Publisher The British Blockchain Association
Abstract Trust is a fundamental precondition underpinning exchange and economic coordination but is costly to maintain. Given the potential for agents to enjoy zero-sum gains by opportunistically betraying the trust of exchanging counterparties, an edifice of occupational roles, organizational forms and institutional practices have emerged in an effort to uphold trust. In simple terms, there exists a "cost of trust." This paper provides numerical estimates of the cost of trust for the United States economy, based on an attribution of labor force occupational data with varying degrees of trust-maintenance. Occupations represented in high cost-of-trust activities include managers, lawyers and judges, tax professionals, accountants and auditors. Overall, it is estimated that the cost of trust accounts for 35 per cent of U.S. employment in 2010. The cost of trust has significant implications for the economic applicability of blockchain compared with conventional forms of ledger technology largely maintained by centralized third-party organizations.
Subject Industry Economics and Industrial Organisation
Keyword(s) blockchain
measurement
opportunism
transaction costs
trust
DOI - identifier 10.31585/jbba-1-2-(5)2018
Copyright notice This is an open-access article distributed under the terms of the Creative Commons Attribution 4.0 International License (CCBY-4.0). View this license’s legal deed and legal code for more information.
ISSN 2516-3949
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