This article examines the determinants of steady state trust in a population of principals and agents, where the former learn from experience using boundedly rational procedures. For any distribution of agent types, the long-run distribution of principal behaviour is characterised. Heterogeneity...

A model is developed in which a continuum of agents makes interdependent output decisions in a stochastic environment characterized by strategic complementarity. Two groups are distinguished: naive agents follow a costless adaptive expectations rule, while sophisticated agents incur an...