Research Management

Mind Your Step: Your Virtual Interactions Say Something About You

, by Jenny Mao
Networks act as prisms that generate signals of trustworthiness

Networks, like prisms, refract signals of trust based on actors' positions in the social structure and their networking behaviors, according to Giuseppe (Beppe) Soda (Professor of Organization Theory and Network Analysis at Bocconi's Department of Management and Technology).

Using the metaphor of a prism to describe how the network operates, a new paper forthcoming in Management Science by Professor Soda and his coauthors Akbar (Aks) Zaheer (University of Minnesota), Michael Park (INSEAD), Bill McEvily (University of Toronto) introduces the concept of "prismatic trust" to explain trust formation in network contexts. In physics, a prism refracts, or bends, light, splitting it into its constituent spectral colors. Similarly, the authors suggest that the network refracts or alters observable signals, which could be status, communication, or other forms of interactions, in a way that affects trust.

"We introduce a nuanced understanding of trust in network contexts, emphasizing the role of publicly observable network status and behaviors in shaping trust perceptions," Professor Soda explained. "Prismatic trust emerges in social structures even in the absence of direct and indirect experience among actors." Unlike trust from direct experience or institutional frameworks, prismatic trust arises from observable signals emitted by the network. The public visibility of both network status and networking behaviors allows actors to observe and interpret these signals, influencing their trust assessments. The study tests this theory using data from EZ-Trade platform, the world's largest online social trading platform, analyzing over 28,000 traders across 38 weeks.

In this interconnected space, the true essence of a trader's competence and character come to light through their interactions within the network. Eigenvector centrality (traders followed by others who are themselves highly followed) in the network is seen as an indicator of a trader's competence and ability. This status is akin to a digital badge of proficiency, showcasing their prowess in navigating the complex world of stocks, currencies, or commodity trading. Positive sentiments in communication among traders are also significant in trust creation, as they indicate the goodwill of a trader, contributing to their perceived trustworthiness. Both high eigenvector centrality and networking behavior comprised of and positive sentiments in communications enhance trust accumulation. Like a seasoned captain who skillfully navigates their ship while maintaining a warm rapport with the crew, traders who embody both expertise and goodwill naturally draw more copiers to their side.

The research unveils a pivotal trend: as our networks transition from the physical world to digital domains, the visibility of our online actions and connections becomes increasingly critical. This shift towards virtual interactions means that what we do and who we connect with in these digital spaces can significantly influence our daily social experiences. The concept of "prismatic trust" opens up a whole new way of looking at trust as a more expansive resource. Traditional trust is often limited, bound by the tight-knit nature of our personal relationships. But trust that is cultivated in the digital networked world has the potential to grow far beyond these confines, limited only by the network's reach.

Soda, Giuseppe; Zaheer, Akbar; Park, Michael; Mcevily, Bill, "Prismatic trust: how structural and behavioral signals in networks explain trust accumulation", forthcoming in Management Science,