Public Trust in Organizations

Public trust is crucial for the functioning of many organizations, such as central banks. Therefore, it is important to understand which institutional characteristics affect it. More specifically, we ask whether an individualistic or a collectivist structure makes an organization more trustworthy; and whether or not communication in the form of organizational mission-statements increases public trust. To address these questions, we study repeated versions of a basic trust game in which the trustee is an organization where decisions are either made by an individual or a collective. A game-theoretic analysis implies that public trust may or may not occur for a collectivist structure with overlapping terms of decision-makers but that public trust is impossible to achieve for an organization dominated by an individual. We propose a laboratory experiment to test our theoretical predictions and to assess the scope for trust when theory does not make unambiguous predictions.