Thursday, March 12, 2015

Trust Premium

There are unfortunately always those who will spoil the party. The question is whether or not they are outliers and whether focusing your energy on them is worth it. Sometimes the benefits you get from trusting people outweighs the cost.

A great example of this is the self-scanning at some of the shops in the UK. If you have registered, you can walk in, swipe your credit card and take a scanner. As you walk around the store doing your shopping you scan items and put them straight into packets. Once done, you put the scanner back in its holder, swipe your card and you are done. You can go. No queues. We all know how good Brits are at queueing – but if they choose to, they can be done.

The shop needs to do a calculation. They know there are going to be people who come into the shop and take things without scanning them. They have to decide if the convenience offered (no queues) and reduced cost (less staff required) outweigh the cost of the outliers (The people who can’t be trusted). This is the trust premium.

Unfortunately we can’t always trust people, and the situation has to allow for it. While there are people that struggle day to day in the UK, there isn’t the extreme poverty that is rampant in some parts of the rest of the world. It would be crazy to expect this system to work in country where people were starving. I don’t think this means Brits are more trustworthy. I believe people in general want to be good. There are just other things they want too, and those things need to be solved first.

One of the reasons I am a big fan of Uber is that it introduces the ability to trust strangers. This is partly because technology allows a brief, but trustworthy, 'introduction'. There is no cash exchanged. Customers have signed up using credit cards. They have a registered smartphone. They have a profile pic. They have a history. In exchange, the customers get information about the driver and the ability to give feedback. Over the 18 months or so I have been using Uber, I have been quizzing the drivers and the system really does seem to work better. Ueber alles, uber everything.

Compare the way we walk down the street to the way we behave in the protective anonymous bubble of our cars. Imagine sidewalk rage as you weave your way through people being the the same as road rage. We don't do it because we make eye contact. Think how embarrassing (even justified) road rage is when you make eye contact with the raged at and realise you know them. Cue middle finger withdrawal.

Anonymous Bubble

Culture is one of the ways we build trust. We know the rules and this makes us feel safe. We have also seen how this is a flawed model when it comes to learning to share our toys. There are massive gains to figuring out ways to build trust without creating ingroups and outgroups.
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