Trust is usually taken for granted by economists, yet it is central to all transactions. It is essential for the smooth functioning of society and for ensuring individual well-being. This article discusses how people pay to acquire trust by enhancing their reputation. An approach is presented that treats reputation as a capital asset in which people are willing to invest. The article shows how both dishonest and honest people invest in their reputations and both may exhibit honest behavior, even though their underlying motivations are different.
