Formation of Trust: Experimental Approach Towards Investigating the Formation of Trusting Beliefs in an Online Environment Malvin Yeo and Chris Dubelaar Monash University, Melbourne, Australia Abstract In this paper, we aim to investigate the process of trust formation particularly from an electronic commerce perspective using an experimental approach based on our belief that trust studies adopting a cross-sectional research design are only showing us snap shot views of different people at different stages along the process, but not necessarily the complete view of trust. Since there is a general agreement in the literature of trust as a behavioural concept which develops over time through online interactions (Blau 1964, Kramer 1994, Mcknight, Cummings & Chervany 1998, Zand 1978), then it may be possible that such snap shots taken at different points of the trust formation process tell very different stories which eventually leads to very different conclusions on what may be the same object of investigation. The question is what can we discover of the trust formation process when we take snap shots at the various crucial points of an online transaction. To facilitate this investigation, we adapted the conceptualization of Papadopoulou and colleagues (2001) to our study and designed an experiment to test the model which we believe captures the dynamism of the trust formation process. Keywords: Trust; Online trust; Internet shopping; Experiment; Static; Dynamic. Trust dilemma: Discussed as Dynamic, studied as Static The fundamental lack of faith that currently exists between merchants and consumers on the Internet today has often been blamed for the reason why consumers have yet to shop online in large numbers, or have demonstrated great amounts of resistance to the concept of Internet shopping (Ang, Dubelaar & Lee 2001, Grabner-Kraeuter 2002, Grewal, Lyer & Levy 2002). Perhaps it could be the issue of trusting an array of ‘faceless’ merchants who are only represented by their attractive websites, to conduct business in a trustworthy manner. When faced with such situations of uncertainty, we have learnt by experience to apply a series of ‘mental shortcuts’ (Grabner-Kraeuter 2002), one of the most effective is to trust (Bauer, Grether & Leach 2002, James Jr. 2002, Morgan & Hunt 1994). Trust or the lack of it is a significant impediment to electronic commerce, and businesses today have failed to adequately address the trust gap on the Internet (Grabner-Kraeuter 2002). The only way the Internet can be accepted as a viable platform for electronic commerce is when a basic foundation of trust is established among the participants (i.e. merchants and consumers) (Ang, Dubelaar & Lee 2001). Much has been written about trust, however its elusive nature continues to bewilder researchers as well as practitioners despite the bulk of effort investigated in researching the concept witnessed today (Falcone, Singh & Tan 2001, Gambetta 1988, Morgan & Hunt 1994, Svensson 2001). Reiterating the words of Rousseau, Sitkin et al. (1998) from their seminal work on trust “scholars tend to view trust dynamically but focus on specific phases in developing their conceptual frameworks” (p. 398). In other words, we recognise and speak of trust as a