You’ll take this deal and like it: the limits of rational trust, part 3

In the previous posts I discussed four ways in which rational trustworthiness, that is, the decision to be trustworthy because it is seen to pay off in the long run, breaks down. Today I’ll take a look at the last type of trust breakdown: the dominant strategy.

In game theory a dominant strategy is one a move or series of moves you can perform without the other players being able to stop you. Dominant strategies won’t necessarily leave you as well off as cooperative ones, though they can, what they are is things you can do and force the other players to accept.

In the business and commercial worlds dominant strategies are usually the purview of monopolies and oligopolies. If there are only one or a few businesses providing something you need, whether that’s insurance, internet or credit cards, you accept the price and service offered, or you do without. In the old days this used to be called the company store syndrome, where you had to use company scrip at the company store, and the company store was often the only store in your town. You paid what they charged, you bought what they offered, or you did without.

The dominant strategy relies not just on having an oligopoly or monopoly, but on having a product that some group of people must have. In the modern world there are a pile of things you can’t do without a credit card. Going without internet or phone service isn’t an option for most people, and while many people do go without insurance, most people would rather not. Companies which are in this position: no real competition, and a product which people must have, do not need to act trustworthy. Rational trustworthiness is not a factor for them, because they usually don’t believe they’d do better by being trustworthy, and even if they would, doing so is more work than simply saying “this is the product, this is the price, take it or leave it, no one else is going to give you a better deal.”

Which brings us back to the original point, which is that organizations or people who are trustworthy only because it is rational, only because it is to their advantage, aren’t actually trustworthy. The second it is in their interest to betray, they will do so. This may be because they can cash out, because they won’t be in the business for long, because they’re not long for the world, because enforcement mechanisms have broken down or because you’re lunch, not a customer, but whatever the reason, trust that is rational isn’t actually trust.

(Read part one and part two for the details on each way that rational trust breaks down.)