1. “New Learning” Barnard’s Inn Hall Holborn London EC1N 2HH Tel: +44 (0)20 7831 0575 Fax: +44 (0)20 7831 5208 Email : enquiries@gresham.ac.uk www.gresham.ac.uk © Gresham College 2009 Mercers’ School Memorial Professor of Commerce Michael Mainelli Beyond Price Trust Me, I’m Commercial

2. www.gresham.ac.uk © Gresham College 2009 Outline Trust is not a good Trust in theory, and diagrams Trust in games Trust in volatility Trust in money Trust me, I’m human “Get a detailed grip on the big picture.” Chao Kli Ning

3. www.gresham.ac.uk © Gresham College 2009 Bond, Commercial Bond

4. www.gresham.ac.uk © Gresham College 2009 Motherly Trust

5. www.gresham.ac.uk © Gresham College 2009 Agency Theory [Source: http://en.wikipedia.org/wiki/Principal-agent_problem]

6. www.gresham.ac.uk © Gresham College 2009 Information Theory Encoder Interpreter A Decoder Interpreter B Encoder Message Feedback [Source, Schramm, 1954]

7. www.gresham.ac.uk © Gresham College 2009 Trust Theory P/A A/P obligates performs evaluation & self interest evaluation & self interest Experience TTP Security Trust Anticipation

8. www.gresham.ac.uk © Gresham College 2009 Nobody Loves Me Like I Love Me [Source: http://www.ketnapatel.com/artworks/sketches/sketches.html]

9. www.gresham.ac.uk © Gresham College 2009 Trust Equation Reputation = Σ (Experiences – Anticipations) Obligation Trust = Reputation

10. www.gresham.ac.uk © Gresham College 2009 Trust In A Game

11. www.gresham.ac.uk © Gresham College 2009 Mexican Standoff [Cat-eyed tree-snake, deadlocked with a Morelet's treefrog -

12. www.gresham.ac.uk © Gresham College 2009 Experiences

13. www.gresham.ac.uk © Gresham College 2009 Anticipations

14. www.gresham.ac.uk © Gresham College 2009 Green Shoots Of Anticipations

15. www.gresham.ac.uk © Gresham College 2009 Experiences Tighter Than Anticipations Mediocre/Poor – had expected better Adequate - better than expected, though not expecting much Reliable Disastrous Amazing

16. www.gresham.ac.uk © Gresham College 2009 Anticipations Tighter Than Experiences DisappointingExceptional Disastrous Amazing Reliable

17. www.gresham.ac.uk © Gresham College 2009 Accumulated Differences Disinformation Experience Anticipation Positive difference Negative difference Large difference Small difference Disastrous Amazing Poor Information Reliable Adequate

18. www.gresham.ac.uk © Gresham College 2009 A Problem Created … Is A Margin Improved 100,000 customers 5,000 'normal' problems create 95,000 problems increase problem catch-rate to 96% Returning Customers Recommendations 100,000 customers 95,000 normal experiences 5,000 problems problem catch-rate 4% 84,550 3,312 285,000 -48,000 uncaught 1,000188 90,240 2,760 480,000 -40,000 + 4,950 + 202,000 1. 2. 0.94 5 0.69-10 0.69 0.94 0.893 5 -10

19. www.gresham.ac.uk © Gresham College 2009 Building Trust – Slow Path Anticipations Experiences difficulties tough times goodwill commitment

20. www.gresham.ac.uk © Gresham College 2009 Sowing Betrayal – Fast Crossover Anticipations Experiences creating trust trusting taking advantagebetrayal

21. www.gresham.ac.uk © Gresham College 2009 Volatility Makes Friends Disinformation Experience Anticipation High volatility Low volatilty High volatility Low volatility Dangerous Exciting Boring Information Reliable

22. www.gresham.ac.uk © Gresham College 2009 Trusting Souls [Source: http://www83.homepage.villanova.edu/richard.jacobs/MPA%208300/theories/categorical%20imperative.html] “What’s our policy on trust?”

23. www.gresham.ac.uk © Gresham College 2009 VIX TO RealitY [Source: Bureau of Labor Statistics (inflation), Wikipedia (historical VIX)]

24. www.gresham.ac.uk © Gresham College 2009 Trust Me, I’m Human [Source: http://khushi.files.wordpress.com/2007/12/]

25. www.gresham.ac.uk © Gresham College 2009 Discussion 1. How can we know when we’re too suspicious – the opposite of “too trusting”? 2. Can we ultimately automate trust?

26. www.gresham.ac.uk © Gresham College 2009 Beyond Price Trust Me, I’m Commercial Thank you! “Get a big picture grip on the details.” Chao Kli Ning