Contracting With Uncertain Level Of Trust

@article{Braynov1999ContractingWU,
  title={Contracting With Uncertain Level Of Trust},
  author={Sviatoslav Braynov and Tuomas Sandholm},
  journal={Computational Intelligence},
  year={1999},
  volume={18}
}
The paper investigates the impact of trust on market efficiency and bilateral contracts. We prove that a market in which agents are trusted to the degree they deserve to be trusted is as efficient as a market with complete trustworthiness. In other words, complete trustworthiness is not a necessary condition for market efficiency. We prove that distrust could significantly reduce market efficiency, and we show how to solve the problem by using appropriately designed multiagent contracts. The… 

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