An Evolutionary Game Model with Punishment and Protection to Promote Trust in the Sharing Economy

In this paper, we present an evolutionary trust game, taking punishment and protection into consideration, to investigate the formation of trust in the so-called sharing economy from a population perspective. This sharing economy trust model comprises four types of players: a trustworthy provider, an untrustworthy provider, a trustworthy consumer, and an untrustworthy consumer. Punishment in the form of penalty for untrustworthy providers and protection in the form of insurance for consumers are mechanisms adopted to prevent untrustworthy behaviour. Through comprehensive simulation experiments, we evaluate dynamics of the population for different initial population setups and effects of having penalty and insurance in place. Our results show that each player type influences the 'existence' and 'survival' of other types of players, and untrustworthy players do not necessarily dominate the population even when the temptation to defect (i.e., to be untrustworthy) is high. Additionally, we observe that imposing a heavier penalty or having insurance for all consumers (trustworthy and untrustworthy) can be counterproductive for promoting trustworthiness in the population and increasing the global net wealth. Our findings have important implications for understanding trust in the context of the sharing economy, and for clarifying the usefulness of protection policies within it.