Trust moving from individuals to systems

Trust decline Screen Shot 2015-04-21 at 14.50.11

I just saw this rather depressing chart in the Washington Post. I guess there are a bunch of things that used to be commonplace that we don’t do anymore because we are worried about bad people – hitchhiking and letting our kids play on the street are two examples that spring to mind – so maybe it isn’t a big surprise. Not good though.

What’s curious, though, is that the sharing economy has exploded whilst trust has been declining. How can it be that we are more afraid to hitch-hike, but more willing to stay in a stranger’s spare room? As the Washington Post points out the explanation is that we are moving our trust from individuals to systems.

In other words we might no longer be willing to trust a random hitchhiker, but we have learned to trust a rider’s average 4.9 star review on BlaBlaCar.

“Reputation is everything” is an old cliche, but maybe it will be increasingly true. As more and more people find employment and suppliers through marketplaces from ebay to Uber maybe it will become true that those of us without a good rating will start to find life more difficult.

Perhaps more interesting is what new companies can do to leverage these trust systems. Free delivery or maybe point of sale credit to customers who have good ebay buyer ratings is one such idea, on the basis that these customers will have higher life time value and/or will be less likely to make returns. Generalising, we get to the question of what a good rating on service X implies about how a customer will use service Y.