Control Trust

Discussion

Sander Van Damme:

"many definitions of trust exist. Mayer et al., (1995) spoke of the party's willingness “to be vulnerable to the actions of another party, based on the expectation that the other party will perform […], irrespective of the ability to monitor or control that party”. Gambetta (1988) defines it as “the subjective probability by which an individual A expects that another individual B performs a given action on which its welfare depends”. As is clear from both of these definitions, trust always involves two parties, a first one that needs to have confidence in another one to perform a given action. Trust also incorporates an element of expectation or probability, the possibility of the event going as planned or failing to do so. This inherent uncertainty is what makes it so important to the provision of credit. However, as Tan and Thoen observe in their 2001 paper “Towards a Generic Model of Trust for Electronic Commerce”, these definitions only incorporate trust in the counterparty, something they call 'party trust'. They note that a creditor not only needs to trust his borrower to repay him, but also needs to have faith in the control mechanisms in place to enforce this party trust. So not only do control mechanisms exist to enhance a lender's trust; before these will actually increase a person's trust threshold, he or she needs to have faith in the controls themselves. This is a concept they call 'control trust'." (https://www.zidisha.org/editables/news_docs/Louvain.pdf)