THE GAME OF TRUST AS APLLIED TO FOREIGN DIRECT INVESTMENTS

The article models the relations between host-countries seeking to attract foreign direct investments and foreign investors in terms of game-theoretic game of trust. Host countries are regarded as trustors, whereas foreign investors are regarded as trustees. The formal solution to the game of trust suggests that foreign-countries should not incentivize foreign direct investments. Trust is presented as one of the external factors influencing host-counties to choose the Pareto-optimal solution in the game-theoretic model. Correlation of the data from the Human Development Report and the Global Competitiveness Report confirms that the higher level of trust in societies translates to more incentives for foreign direct investments.