If the backward induction argument is compelling, it is hard to see how rational individuals could ever enter into normal relationships of trust and exchange. All such relationships would have to be grounded in something extrarational, perhaps in normative commitments to be altruistic or more decent than is rational. On this view, the fact that there is apparently a great deal of trust in our lives suggests that we are not rational. I think, on the contrary, that trust is eminently rational and that the backward induction argument is flawed. In brief, the flaw is this: Suppose I know that you are eminently rational and that you believe the backward induction argument. I also know that we could gain substantially from entering a series of exchanges that must terminate, perhaps unhappily, at some distant future point. I can now wreck your backward induction by simply cooperating at our first encounter. You may now suppose I am irrational, or you may reconsider your induction. Either way, you may now decide it is in your interest to reciprocate my cooperation, so that we both gain far more than we would have from continuous mutual defection. Indeed, I think you must reconsider your induction because if I, by acting cooperatively, can get you to cooperate, you should realize that you could do as well with others in such an interaction. That is to say, you must agree that it would be sensible for you to cooperate initially rather than to defect.

XREF: Connects to game theory literature on the finitely repeated prisoner's dilemma and the paradox of backward induction, which many sources treat as a genuine puzzle undermining cooperation.

Russell Hardin, Trust and Trustworthiness, loc. 136