Love Thy Neighbor: Bonding versus Bridging Trust

We study how trust is generated in society. In a two-sector <p> model, we analyze two communities. In the bonding community people do not <p> trust people outside their regular networks. In the bridging community people <p> choose to trust strangers when they meet them. The hypothesis is that when <p> trust is only bonding, it cannot accumulate. Our theoretical contribution is to <p> show that when trust is only bonding then the economy’s level of trust moves <p> to an unstable equilibrium that may under certain conditions ‡uctuate forever. <p> If, however, trust is also bridging, then trust will accumulate. Future research <p> should seek to establish the appropriate institutional framework for establishing <p> the optimal mix between both bonding and bridging social capital in society.