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trust notes

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we offer our approach material
industry analysis and comment

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factsheet Trusting Components


Trust is commonly regarded as a positive good - the lubricant of business relationships. Like oil, it is slippery and difficult to grasp.

We define trust as a property of a system or relationship based on expectations of reasonable and fair behaviour.

How can we assess the level of trust in a given situation?
How can we increase the level of trust?
How should we deal with people, companies and situations we mistrust?
How can we respond to the declared or inferred mistrust of others?

Veryard Projects is working with others building some innovative mechanisms for building and verifying trust. 

We are also collecting patterns for trust and security (among other things), across component-based business and web services.  Our pattern catalogue is hosted by the CBDi Forum.  Comments and contributions are most welcome.


> Who betrayed Harry Potter's parents?
> Are web services more trustworthy?
> Can internet banking be trusted?

> commitment
> knowledge
> shared values

veryard projects - innovation for demanding change

Principles of Trust

veryard projects > trust > trust notes > principles

1 In a complex system of relationships, we try to distinguish between trustworthy and untrustworthy agents and artefacts.

We can then try to assess the risks of dealing with the ones we don't trust, and secure ourselves against rogue behaviour.

2 Trust and mistrust propagate themselves around a system.
  • Trust is often expected to be associative or transitive. If A trusts B and B trusts C, then A must trust C. "You mustn't do business with someone I don't trust." (This might reduce to the rational calculation: "I don't trust your judgement or bona fides.")
  • Where such a system manifests some form of bad faith or betrayal, it may seem obvious which of the players in the system is "guilty". The rest of the players, together with informed observers, now mistrust this player, and perhaps avoid doing business with him. But the phenomenon may be more complex than that, and the ostracized player is merely a scapegoat. Mistrust by symptom, mistrust by association.


    Who killed Harry Potter's parents? Transitive networks of trust and betrayal
3 Trust is an emergent property of a system of relationships. 
  • Guarantors and regulators serve the function of increasing the overall level of trust in a system. But unwise guarantees may merely create moral hazard. It is sometimes argued, for example, that if central banks are committed to rescue failed banks, this may increase the recklessness of individual banks, and thus have a counter-productive effect on the banking system as a whole.
4 When we are dealing in familiar domains, we often take trust for granted - until something appears to shake our trust. In new domains, however, we may be much less certain whom or what we can trust.  This difficulty is currently evident in e-commerce.
Can Internet Banking be Trusted?
5 There are some big problems with conventional thinking about trust. Simple patterns of trust are sometimes misleading. The signs of trust can usually be faked. Security mechanisms can always be broken if the stakes are high enough.
6 Trust and security can never be purely technical matters. They depend crucially on process and people.

Growing trust entails commitment, knowledge and shared values.

veryard projects - innovation for demanding change

Can internet banking be trusted?

veryard projects > trust > trust notes > internet banking

When we are dealing in familiar domains, we often take trust for granted - until something appears to shake our trust.  Although lawyers may urge us to write everything down rather than rely on trust, we often resist or even resent this advice.

In new domains, however, we may be much less certain whom or what we can trust.  This difficulty is currently evident in e-commerce.  In this light, let's review two recent reports on internet banking.
Many online banks provide far less consumer protection than traditional offline banks.  In some cases, there is no ceiling on the liability of the customer in the event of fraud, in contrast to the situation with traditional credit or cash cards.
In a recent British survey, only 7% of adults trusted online banks, compared with 75% who trusted traditional banks.

If some of the banks don't trust the technology to prevent fraud, and want to place all the risk onto the customer, why should the customers trust either the technology or these banks?  Unfortunately, this attitude by some banks is likely to have an effect on the level of trust in the internet banking market overall.
more internet risk

veryard projects - innovation for demanding change

Trust and Mistrust

veryard projects > trust > trust notes > and mistrust

What is trust?

Trust (or trustworthiness) has several aspects.
Capability The ability to make credible commitments. 

Can this person or company fulfil its promises and expectations?

Good faith An expectation that commitments will be honoured, even in the absence of an external enforcement mechanism. (Although it may be theoretically possible to take legal action against the other party, this often involves too much cost and delay to be a practical option.) 

Is this person or company willing to fulfil its promises and expectations? Cheerfully or grudgingly?

An expectation of honourable behaviour in unforeseen circumstances. (In other words, you behave as you would have agreed to behave, if these circumstances had been foreseen.) 

Will this person or company suddenly start behaving badly/unpredictably when anything unusual crops up?

Misfortune Not taking advantage of the bad luck of the other party. 

Is this person or company an opportunist?

Containment Protecting the other party (as far as possible) from one's own turbulence or misfortune. 

Is this person or company going to drag me into all his/her/its internal problems?  Are they going to let me down, always blaming someone else?

Excuses for bad behaviour

A trusting relationship rules out some of the standard excuses for bad behaviour - the corporate equivalent of what parents and teachers hear all the time.
"He made me do it." blaming third party
"It was an accident." denying responsibility for own carelessness or recklessness
"He hit me first." imputing retaliation
"I didn't know I wasn't supposed to do that."

"It didn't say anything about that in the contract (or specification)."

taking advantage of the absence of explicit constraints


There is a clear difference between a simple absence of trust, and positive mistrust.  Mistrust is supposedly a consequence of past actions.  In fact, it is often a consequence of a complex set of beliefs, perceptions, associations and interpretations.

Mistrust is usually more difficult to deal with than simple absence of trust.  How do I deal with other people's mistrust of me, whether this is fairly deserved or not?  Do I tackle false beliefs head-on, or do I try to dissociate myself from the events that triggered the mistrust, or do I simply switch my identity and reappear under a new guise?
more Restoring Trust - Overcoming Mistrust

veryard projects - innovation for demanding change

Trust and Risk

veryard projects > trust > trust notes > and risk

If I take risks, that's my own affair. But if I break my leg, or lose my driving licence, or get thrown into prison, that may affect my ability to fulfil my obligations to other people. Can we really trust people who are unreliable, because of the risks they take?

There is a particular concern about the use of shared or borrowed assets. What risks may we take with other people's assets? This is a difficult area, where there are no clear rules of conduct. Some people think they are morally bound to take greater care of other people's assets than of their own, while other people are equally careful or careless.

If someone appears to be reckless with his own assets, does that entitle us to take similar risks with his assets?

Collaborative gambling raises further difficult issues about trust and shared risk. Many forms of proxy gambling are illegal, because of the huge opportunity for abuses of trust. (Suppose I place a bet on your behalf and then "lose" the ticket. Suppose I buy two lottery tickets, and only decide after the draw which one was yours.) But there are many commercial situations that have a similar structure of shared risk.

Trust and scale

Is it easier to trust large organizations or small ones?

Talking of a change of scale in the social order, Geoff Mulgan writes: 'One of the best signs of this return to smallness in many Western societies has been the decline in trust in big institutions, such as manufacturers, governments and trade unions, and the corresponding rise in trust in personal relationships.' [Connexity, p117]

veryard projects - innovation for demanding change

Requirements for maintaining and growing trust

veryard projects > trust > trust notes > requirements

Growing trust entails (among other things) commitment, knowledge and shared values.

veryard projects - innovation for demanding change

Trust and Commitment

veryard projects > trust > trust notes > and commitment

Growing commitment

Growing trust implies growing commitment, on both sides.

Commitment includes both obligations (my obligations to you, your obligations to me) and exit costs (costs to you or me of terminating or cutting back the relationship).

Obligations may include: actual obligations, contingent obligations (agreed contingencies in foreseen circumstances) and hypothetical obligations (what would have been agreed if unforeseen circumstances had been foreseen).

People and companies often fail to recognize the true depth of the commitment they have made to another party - especially the exit costs. Alternatively, they over-estimate the exit costs, and this tempts them to stay in an unhealthy relationship.

Some people and companies deliberately misrepresent the depth of their commitment to others, either to avoid being taken advantage of (especially in a situation where commitment appears to be unequal) or to gain some advantage themselves. Such tactics themselves indicate a shortage of trust or trustworthiness.

Negative commitment

Negative commitments and stable boundaries may be as important to trust-building as positive ones.

IBM has recently stated that its business is technology and solutions, and that it has no intention of becoming an ISP, a bank, or a retail operation. Martin Butler, the industry analyst, sees this as an important strategic commitment on IBM's part. According to him, "it means that large companies can enter into an uninhibited relationship with IBM, without fear that a partner might one day turn into a competitor". Butler contrasts this with the predatory behaviour of some other leading IT companies.

[source: Martin Butler, Contra, July 1999]
more market topology - barriers to entry and exit

veryard projects - innovation for demanding change

Trust and Knowledge

veryard projects > trust > trust notes >and knowledge

Building trust requires a growth of knowledge (about the other party) in balance with the growth of commitment.

Knowledge about the other party includes the following:

identity who are they really?
commitment how committed are they to this relationship?
perceptions, beliefs and values how do they see the world?
capability what good deeds or bad deeds are they capable of? 

(based on past history or present capacity)

other associations whom else are they in bed with? 

(and how committed are they to these other partners?)

veryard projects - innovation for demanding change

Trust and Values

veryard projects > trust > trust notes >and values

Shared values

There is a relationship between trust and shared values. Some overlap in values is necessary in order to have a relationship at all. However, it is neither necessary nor sufficient to have identical values.

Where value systems are similar, small differences in values may be either overlooked altogether, or exaggerated in importance. These differences should be respected, but kept in proportion.

Some people adopt the attitude: "These are the values you must have if you want to do business with me." This may create an incentive for other people to falsify their declared values, which reduces the total trust in the system as a whole.

Value of shared assets

If we share some assets, then we probably need to share some values in relation to those assets. If I entrust you with something I regard as extremely valuable or important, then I want you to treat it with due respect. Either you must value it as highly as I do, or you must treat it as if you did.

This is particularly difficult to negotiate with relatively intangible assets, such as customer relationships or intellectual property.

Consultancy networks always struggle with questions of trust. How can I trust you to behave in front of my clients? And how should I behave in front of your clients, to repay your trust?


Developed by Richard Veryard and Aidan Ward.  Thanks also to Dr Diego Gambetta.
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This page last updated on November 14th, 2003
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