You can have your trust and calculativeness, too: Uncertainty, trustworthiness and the Williamson thesis

Abstract

Oliver Williamson argues that a principal will only trust an agent when there are safeguards to ensure the agent has an incentive for trustworthiness (Williamson, O. E. [1993]. Calculativeness, trust, and economic organization. The Journal of Law and Economics, 36, 453–486). However, such circumstances are devoid of vulnerability and possibility for betrayal. Williamson claims that this is not trust at all. I argue that a principal can be calculative in his/her decisions to trust an agent but be genuinely vulnerable to betrayal as well. The key is in distinguishing between an environment of risk and one of uncertainty. Uncertainty creates vulnerabilities for principals because of the difficulty in identifying and erecting safeguards that fully assure agent trustworthiness. In such conditions, a principal will also need to rely on the moral disposition of the agent to refrain from engaging in opportunistic behaviour. However, a reliance on moral dispositions creates the possibility of real betrayal. Thus, in an environment of uncertainty, a reliance on the moral dispositions of others means you can have your trust and calculativeness, too.

Keywords:

• trust
• calculativeness
• trustworthiness
• uncertainty
• moral dispositions

Acknowledgements

I appreciate comments from Peter Klein, Heidi Stallman, the editor Guido Möllering and an anonymous reviewer.

Notes on contributor

Harvey S. James, Jr, Ph.D., is an Associate Professor in the Department of Agricultural and Applied Economics at the University of Missouri in Columbia, Missouri (USA). Dr James is the editor-in-chief of the journal Agriculture and Human Values and is a member of the editorial board at Business Ethics Quarterly. Dr James has a BA in economics and an MS in sociology from Brigham Young University, and an MA and PhD in economics from Washington University in St. Louis. His research interests include applied ethics and the economic foundations of trust and ethical behaviour. He is currently studying how ethical behaviour affects economic growth and entrepreneurial activity and how genetically modified crops affect smallholder farmers in Kenya.