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Chapter 45 Trust in the New Economy Trust issues arise in exchange relationships in which both sides of the exchange cannot be carried out simultaneously in one place, or where there is asymmetric information about quality or other attributes of what is changing hands. In the old economy, such issues were often partly addressed by repeat dealings with entities at least represented by known faces and names. By facilitating trade with almost no geographic limits, the new economy allows for greater choice among trading partners, but at a loss of personal interaction. By facilitating information flow and processing, it supplies more bases for evaluating trustworthiness, but consumers can be overwhelmed by the quantities of information available and by the complexity of the strategies needed to evaluate it. Consumers are also wary of the ways in which the information they supply to sellers can be abused. The question of trust in electronic commerce is not entirely settled by technical measures such as encryption, because parties still need to trust, that is to say to gamble on the reliability of their partners. Brand-named verification services, branded sellers, large-scale firms, alliances between established and old companies, ‘click-and-mortar’ hybrids, and economic concentration are among the common responses to these and other problems. We show how in addition to these means, the human cognitive machinery that evolved in settings of face-to-face interactions in small groups not only impinges on, but helps to make possible, trusting of complete and faceless strangers, in the absence of which electronic commerce could not be conducted.
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