Abstract for:Why Not Tit-for-Tat: Dynamics of mutual trust

Governance is no longer viewed as a top-down command-and-control process but a process involving multiple actors. This is of special importance for environmental governance that i.a. deals with societal problems that are of supra-national nature, where no superior executive power exists. In understanding the emergent properties of governance networks, it appears crucial to explain the dynamics of build-up and erosion of trust between agents endogenously as it appears to be an essential ingredient for effective cooperation. The paper goes beyond previous SD literature by considering trust explicitly as a process of expectation formation regarding reliability, based on past behavior incl. potential biases. It also considers a possible influence of one's trust on one’s own behavior. Results show that for driving up trust one may at times need to act counterintuitively by acting reliably even in the face of unreliability of network partners. This stresses the importance of our “bad conscience” and social norms formed in social networks that advise us to behave reliably even in the face of unreliability of the other actor: they may have a strong stabilizing effect for trust in human relationships.