“Trust reduces transaction costs.”
Mistrust is costly. The less trust there is in companies, institutions, and society, the more rules and controls are created. This slows down decision-making, complicates processes, and simply makes collaboration less efficient. Instead of responsibility, risk mitigation and bureaucracy take center stage. Yet this is precisely where an often-underestimated connection lies: Trust is not a soft factor, but a key economic lever. For wherever people work together in a spirit of trust, the effort required for monitoring and the costs of coordination decrease significantly.
“The worst situation is when someone is constantly monitoring, because that really destroys trust.”
Prof. Dr. Matthias Sutter is one of Europe’s most renowned behavioral economists and has been studying the mechanisms of cooperation, trust, and social behavior for decades. In conversation with Georgiy Michailov, he explains why trust creates economically measurable benefits and why overregulation is often a sign of weak leadership. Sutter also discusses conditional cooperation, the influence of reciprocity on teams, direct democracy, social dilemmas, and the question of why cooperative people are more successful in the long run.
*Video only in German
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