'I'll trust you if I expect you to trust me': An analysis of interpersonal trust, friends, and social interactions within social networks

The paper is divided into two parts. The first chapter tests a model of trust by allowing for expectations using the Social Capital Benchmark Survey (2000). We find that trust returns to income and education vary among different groups, and that diversity can increase trust to attain an equilibrium trust level. In the second chapter, we extend the choice of trust to interactions within social networks and to online social networking. We aim at contributing to the existing literature on social interactions by adding motivation to gain either a weak or strong tie. We find that formal organizations restrict access to those with low-income and low-education, and that online networking can be seen as a weak-tie building, informal interaction that becomes a device that bridges social differences between individuals. The policy implications of these results include social diversification in helping organizations attain better economic outcomes, and the importance of access to resources and the Internet in order to decrease socioeconomic differences across communities.