Trust, Growth, and Inequality: An Agent-Based Model

Abstract

An agent-based model of the investment game is proposed to study the complex dynamics between trust, growth, and inequality with different underlying technologies. It is found that agents in this economy, through learning to trust and to be trustworthy, are able to coordinate themselves well in networking, which hence facilitates wealth creation. The excessive smoothness in economic growth is, therefore, prevalent in all simulations, and the underlying technologies can only determine the speed of growth and network formation. While the advancement of technology can ameliorate the inequality of wealth distribution, it also lowers the social mobility of the agents.