The cultural transmission of trust and trustworthiness

We consider the cultural transmission of trust and trustworthiness in a trust game with spatial matching. Players are assumed to enjoy psychological benefits from good conduct. The game has a unique equilibrium with different behavioral modes, depending on social distance between players. Parents rationally choose efforts to transmit their own values to their children. Trust and trustworthiness coevolve, and the transmission dynamics has a globally stable stationary point if the increasing rate of educational marginal costs is high. While "local" enforcement applied to transactions between closer partners deteriorates the diffusion of trust and trustworthiness, they are influenced by institutions in different ways. Better "intermediate" enforcement crowds out trust and crowds in trustworthiness. (C) 2019 Elsevier B.V. All rights reserved.