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Can I Trust You?

Here’s an interesting snapshot of a discontinuity.

It’s been clear for a long time that the rules, regulations, and laws the nation state used to run the economic system aren’t working anymore.  They simply don’t provide the trust they used to provide in a connected world.

For example:  how many times a day do people approach you with the intent of fleecing you for everything you own (or worse)?

When you combine e-mail, robocalls, and malware that number is in the dozens (and don’t even look at the number of times your home router is probed by hackers daily).  It seems like there’s an entire army of people working everyday to take you to the cleaners (and there actually is).

Jet back twenty years and that number is pretty darn low.  Frankly, before globalization and the Internet it wasn’t much of a worry unless you lived in a big city.

However, that reality hasn’t caught up with many people, particularly those of us that grew up before globalization.  We’re still hardwired to trust more than we should given the reality of the world.   In comparison, the generation of Millennials that are graduating for college and high school have learned differently.  They don’t trust the government’s rules and regulations to provide a bubble of artificial trust anymore.

A new study from Pew shows this:

2014-03-08_10-08-24

The simple truth is there is a generational shift underway.   A new generation that understands that the rules don’t work and that bad people are taking advantage of that situation.

That’s the first discontinuity.  The second is interesting too in a different way.  It’s counter intuitive:  despite that distrust, this younger generation is the group powering forward the sharing economy.  They are more willing to trust strangers on these sharing networks that older generations.

The reason for this is simple.  It’s the reason there is hope for a return of trust long after rules and regulations wear thin.  It’s reputation.  Online reputation. What you’ve done.  Reviews of your previous behavior.   All of these sharing systems are based on two way reputation systems.  These systems, plus what you can find out about the person on linked social media, provides a great deal of insight into their trustworthiness (they are getting harder to scam by the day).

Why does this work and where is this headed?

Online reputation is a return to the system that used to limit bad behavior before the nation-state took control.  Back in those days, most of our interactions (from commerce to relationships) were local.  Local reputation networks limited bad behavior.   Reputations are coming back in a new, global form online, and that’s going to remake trust.

JR

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Discussion — 6 Responses

  • John March 8, 2014 on 6:12 pm

    the point of interest in the graph is the reaction of the different generations to the 2008 economic collapse.

    Reply
  • Chris March 9, 2014 on 9:47 am

    One requirement for reputation (online or otherwise) to serve as a guide for trust is reliable identification. If a person can change identification at will, and create new identities or assume the identity of others, then reputation will have no effective meaning.

    Reply
  • Marcus Wynne March 9, 2014 on 10:06 am

    Morning, John — excellent and fundamental underlying the emerging structure; what’s interesting about the technical evolution of trust-based systems is that it also creates and opportunity for a new kind (or new evolution) of economic warfare/competition — trust-destruction as a competitive tool.

    Examples:
    Posting multiple negative reviews of a book under different names
    Posting positive reviews of a book under the author’s (spoofed) name and then exposing it
    Posting negative reviews on Yelp against business competitors;
    Hiring people to do all of the above in exchange for drugs/money/laughs
    Posting negative comments on blogs/etc. — with hot-links that connect to spam/phishing sites, etc.

    One of the interesting observations I have about Millennials (I’m a Boomer) is that while in general their tech-savviness (and tech-version of street smarts) is pretty good; their face-to-face basic elicitation/evaluation/ of other people in the classic sense of “street smarts” tends to be significantly less than those of other generations. I make exception for those Millennials who live in a rougher urban context, but in general, I’ve found the more tech-reliant Millennials to be at a loss (in general) when dealing with subterfuge or potential violence face to face.

    Certainly willing to be proven wrong, but that’s my observation and two cents worth.

    Thanks for the continuing great work, John! I’ll give you a call soon.

    cheers, m

    Reply