Degradation of Trust and the Digital Firm: Insights from Vector Network Analysis.

Kahneman and Tversky (Kahneman, Tversky, 1979) found that people prefer to do business with a person they like and trust rather than someone they don’t know, even if that person is offering a better product at a lower price. In other words, we do not make decisions because those decisions are optimal; we make decisions when we can trust. Fukuyama (Fukuyama, 1996) found that trust reduces the cost of doing transactions. And, popular business wisdom dictates that the price of trust is the cost of business lost if trust is lost. In a digital economy, where firms have to move fast to partner with new entrants, make acquisitions, and assess the goodness of customers and clients, trust assessment is critical for success; yet, governments, businesses and investors still rely primarily on outdated financial statements to allocate scarce investment resources – when these are not available, they use informal means or even gut feeling. We propose adding the Vector Network Analysis methodology to the Financial Signal Analysis toolbox, and illustrate its applicability to a case in the trust economics domain. We present a quantitative and visual technique, and validate using real data and a cognitive computing process.

Degradation of Trust and the Digital Firm: Insights from Vector Network Analysis. 2016. https://ssrn.com/abstract=2856751
September 19, 2016

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Sources: https://ssrn.com/abstract=2856751