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“New Learning” Barnard’s Inn Hall Holborn London EC1N 2HH Tel: +44 (0)20 7831 0575 Fax: +44 (0)20 7831 5208

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Presentation on theme: "“New Learning” Barnard’s Inn Hall Holborn London EC1N 2HH Tel: +44 (0)20 7831 0575 Fax: +44 (0)20 7831 5208"— Presentation transcript:

1 “New Learning” Barnard’s Inn Hall Holborn London EC1N 2HH Tel: +44 (0) Fax: +44 (0) © Gresham College 2009 Mercers’ School Memorial Professor of Commerce Michael Mainelli Beyond Price Trust Me, I’m Commercial

2 © 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 © Gresham College 2009 Bond, Commercial Bond

4 © Gresham College 2009 Motherly Trust

5 © Gresham College 2009 Agency Theory [Source:

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

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

8 © Gresham College 2009 Nobody Loves Me Like I Love Me [Source:

9 © Gresham College 2009 Trust Equation Reputation = Σ (Experiences – Anticipations) Obligation Trust = Reputation

10 © Gresham College 2009 Trust In A Game

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

12 © Gresham College 2009 Experiences

13 © Gresham College 2009 Anticipations

14 © Gresham College 2009 Green Shoots Of Anticipations

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

16 © Gresham College 2009 Anticipations Tighter Than Experiences DisappointingExceptional Disastrous Amazing Reliable

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

18 © 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, , ,000 uncaught 1, ,240 2, , , , ,

19 © Gresham College 2009 Building Trust – Slow Path Anticipations Experiences difficulties tough times goodwill commitment

20 © Gresham College 2009 Sowing Betrayal – Fast Crossover Anticipations Experiences creating trust trusting taking advantagebetrayal

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

22 © Gresham College 2009 Trusting Souls [Source: “What’s our policy on trust?”

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

24 © Gresham College 2009 Trust Me, I’m Human [Source:

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


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