We study the behavior of for-profit institutions that broadcast reputations to foster trust among market participants. We develop a theoretical model in which buyers and sellers are matched on a platform to engage in transactions involving a moral hazard: sellers can either faithfully deliver goods after receiving payment, or not. Although the buyer does not know a seller's true type, the platform maintains a reputation system that probabilistically assigns binary reputation signals. Buyers make purchase decisions based on reputation signals, which influence the payoffs to sellers who then adapt their type over time. These market dynamics ultimately shape the platform's profit from commissions on sales. Our analysis reveals that platforms inherently have an incentive for rating inflation, driven by the desire to increase commission. This introduces a second layer of moral hazard: the platform's incentive to distort reputations for its own profit. Such distortion is self-limited by the platform's need to maintain enough accuracy that trustworthy sellers remain in the market, without which rational buyers would refrain from purchases altogether. Nonetheless, the optimal strategy for the platform can be to invest in order to reduce signal accuracy. When the platform can freely set commission fees, however, maximum profit may be achieved by costly investment in an accurate reputation system. These findings highlight the intricate tensions between platform incentives and resulting social utility for marketplace participants.

Gossip has been shown to be a relatively efficient solution to problems of cooperation in reputation-based systems of exchange, but many studies don't conceptualize gossiping in a realistic way, often assuming near-perfect information or broadcast-like dynamics of its spread. To solve this problem, we developed an agent-based model that pairs realistic gossip processes with different variants of Trust Game. The results show that cooperators suffer when local interactions govern spread of gossip, because they cannot discriminate against defectors. Realistic gossiping increases the overall amount of resources, but is more likely to promote defection. Moreover, even partner selection through dynamic networks can lead to high payoff inequalities among agent types. Cooperators face a choice between outcompeting defectors and overall growth. By blending direct and indirect reciprocity with reputations we show that gossiping increases the efficiency of cooperation by an order of magnitude.

In addition, we probe the biases of agent trust and differences in agent trust towards other LLM agents and humans.

Abstract-- Trust and the perception of trustworthiness play an important role in decision-making and our behaviour towards others, and this is true not only of human-human interactions but also of human-robot interactions. While significant advances have been made in recent years in the field of social robotics, there is still some way to go before we fully understand the factors that influence human trust in robots. This paper presents the results of a study into the first impressions created by a social robot's facial features, based on the hypothesis that a'babyface' engenders trust. By manipulating the back-projected face of a Furhat robot, the study confirms that eye shape and size have a significant impact on the perception of trustworthiness. The work thus contributes to an understanding of the design choices that need to be made when developing social robots so as to optimise the effectiveness of human-robot interaction. Trust is a fundamental building block for any society to function properly.

Understanding how complex societal behaviors emerge from individual cognition and interactions requires both high-fidelity modeling of human behavior and large-scale simulations. Traditional agent-based models (ABMs) have been employed to study these dynamics for decades, but are constrained by simplified agent behaviors that fail to capture human complexity. Recent advances in large language models (LLMs) offer new opportunities by enabling agents to exhibit sophisticated social behaviors that go beyond rule-based logic, yet face significant scaling challenges. Here we present Light Society, an agent-based simulation framework that advances both fronts, efficiently modeling human-like societies at planetary scale powered by LLMs. Light Society formalizes social processes as structured transitions of agent and environment states, governed by a set of LLM-powered simulation operations, and executed through an event queue. This modular design supports both independent and joint component optimization, supporting efficient simulation of societies with over one billion agents. Large-scale simulations of trust games and opinion propagation--spanning up to one billion agents--demonstrate Light Society's high fidelity and efficiency in modeling social trust and information diffusion, while revealing scaling laws whereby larger simulations yield more stable and realistic emergent behaviors.

While large language models (LLMs) have demonstrated remarkable capabilities in understanding human languages, this study explores how they translate this understanding into social exchange contexts that capture certain essences of real world human interactions. Three LLMs - ChatGPT-4, Claude, and Bard - were placed in economic trust games where players balance self-interest with trust and reciprocity, making decisions that reveal their social preferences and interactive reasoning abilities. Our study shows that LLMs deviate from pure self-interest and exhibit trust and reciprocity even without being prompted to adopt a specific persona. In the simplest one-shot interaction, LLMs emulated how human players place trust at the beginning of such a game. Larger human-machine divergences emerged in scenarios involving trust repayment or multi-round interactions, where decisions were influenced by both social preferences and interactive reasoning. LLMs responses varied significantly when prompted to adopt personas like selfish or unselfish players, with the impact outweighing differences between models or game types. Response of ChatGPT-4, in an unselfish or neutral persona, resembled the highest trust and reciprocity, surpassing humans, Claude, and Bard. Claude and Bard displayed trust and reciprocity levels that sometimes exceeded and sometimes fell below human choices. When given selfish personas, all LLMs showed lower trust and reciprocity than humans. Interactive reasoning to the actions of counterparts or changing game mechanics appeared to be random rather than stable, reproducible characteristics in the response of LLMs, though some improvements were observed when ChatGPT-4 responded in selfish or unselfish personas.

When encountering increasingly frequent performance improvements or cost reductions from a new large language model (LLM), developers of applications leveraging LLMs must decide whether to take advantage of these improvements or stay with older tried-and-tested models. Low perceived switching frictions can lead to choices that do not consider more subtle behavior changes that the transition may induce. Our experiments use a popular game-theoretic behavioral economics model of trust to show stark differences in the trusting behavior of OpenAI's and DeepSeek's models. We highlight a collapse in the economic trust behavior of the o1-mini and o3-mini models as they reconcile profit-maximizing and risk-seeking with future returns from trust, and contrast it with DeepSeek's more sophisticated and profitable trusting behavior that stems from an ability to incorporate deeper concepts like forward planning and theory-of-mind. As LLMs form the basis for high-stakes commercial systems, our results highlight the perils of relying on LLM performance benchmarks that are too narrowly defined and suggest that careful analysis of their hidden fault lines should be part of any organization's AI strategy.

Large Language Model (LLM) agents have been increasingly adopted as simulation tools to model humans in applications such as social science. However, one fundamental question remains: can LLM agents really simulate human behaviors? In this paper, we focus on one of the most critical behaviors in human interactions, trust, and aim to investigate whether or not LLM agents can simulate human trust behaviors. We first find that LLM agents generally exhibit trust behaviors, referred to as agent trust, under the framework of Trust Games, which are widely recognized in behavioral economics. Then, we discover that LLM agents can have high behavioral alignment with humans regarding trust behaviors, indicating the feasibility to simulate human trust behaviors with LLM agents. In addition, we probe into the biases in agent trust and the differences in agent trust towards agents and humans. We also explore the intrinsic properties of agent trust under conditions including advanced reasoning strategies and external manipulations. We further offer important implications for various scenarios where trust is paramount. Our study represents a significant step in understanding the behaviors of LLM agents and the LLM-human analogy.

Widely considered a cornerstone of human morality, trust shapes many aspects of human social interactions. In this work, we present a theoretical analysis of the $\textit{trust game}$, the canonical task for studying trust in behavioral and brain sciences, along with simulation results supporting our analysis. Specifically, leveraging reinforcement learning (RL) to train our AI agents, we systematically investigate learning trust under various parameterizations of this task. Our theoretical analysis, corroborated by the simulations results presented, provides a mathematical basis for the emergence of trust in the trust game.