Trust Me; I Am Corrupt: the Role of Beliefs and Institutions in Determining Political Trust

Abstract: What drives individuals to place their trust on different political institutions? Is it a process solely driven by personal characteristics and economic outcomes or do individuals respond and alter their behaviour based on the performance and quality of the underlying institutions? These are the questions that this research attempts to explore by analyzing data from the European Social Survey (2002 - 2014). At first using a principal-agent model, we try to identify how information asymmetries might provide an answer on how an individual takes a decision to trust an institution based on prior beliefs, current political agents and institutional quality. Subsequently, we attempt to explore propositions of the model empirically by analyzing three institutional variables trust in politicians, trust in the legal system and trust in national parliament. Using an hierarchical model, we attempt to combine information from the micro level (individuals) and macro level (countries) in order to explore if and how individuals respond to aggregate institutional data conditionally to their personal characteristics. Results show that there is significance difference in the role of institutions in high quality and low quality institutional frameworks. Keywords: Trust, political trust, institutions, hierarchical analysis, principalagent, asymmetries