Jamal Awil

← Trust - Making and Breaking Cooperative…

Bounded rationality makes comprehensive contracting fundamentally imperfect. [causal]

In conclusion, then, once firms are locked into a relation, trust is essential. The need for trust can be circumscribed through the efforts of the parties to engage in comprehensive contracting. But the limits to our rationality in a world where surprise is inevitable ensure that such efforts will be imperfect at best. Trust cannot be disposed of entirely.

Diego Gambetta, Trust - Making and Breaking…, loc. 2562