Monday, November 04, 2013

Trusting Too Much Is Better Than Trusting Too Little

Here's a great item from Eric Barker's Bakadesuyo blog:
"People were asked how much they trust others on a scale of 1 to 10. Income peaked at those who responded with the number 8.

Those with the highest levels of trust had incomes 7% lower than the 8′s. Research shows they are more likely to be taken advantage of.

Those with the lowest levels of trust had an income 14.5% lower than 8′s. That loss is the equivalent of not going to college. They missed many opportunities by not trusting."
The finding that one should trust, but not too much, fits with a lot of other human principles.  The Losada Ratio for positivity, shows that teams which are mostly (but not completely) positive perform better.  Analysis of romantic relationships show that couples who are mostly (but not completely) positive are happier.  And optimists do better with a dash of pessimism for realism.

I believe strongly in trust, which I've called the fundamental operating system of Silicon Valley:

Yet I've also counseled entrepreneurs to plan for the worst to minimize the risk and impact of being fired by their investors:

It's nice to have a simple, absolute rule to follow.  But as usual, the optimal strategy is more complicated.  My own recommendation is to give people the benefit of the doubt, but always contingency plan for betrayal.

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