There is a great number of possible actions to reduce the moral hazard, either on the agent or principal side (Picot, Dietl & Franck, 1999: 91; Dixit & Nalebuff, 1993: 95; Kahle, 2002b: 26). Some of the actions can
be used on either side. Actions for the principal are screening and monitoring. Actions for the agent only are signaling, guarantees, securities, building up reputation and destroying bridges to opportunistic behavior.
Whereas contracts, developing tnist by teamwork, ceasing communication, automatic responses, small steps and using “professional” intermediates are possible instruments for either side. The u.se of these activities to reduce the risks of asymmetric information is expensive which the travelers normally will not be willing to pay.
To achieve a maximum of efficiency the costs of risk reduction should be minimized. Monitoring activities to reduce risks that are known to the agents are the most important. The next important instrument is building up reputation as a quality brand. Then follows in importance guarantees to the travelers as a token of commitment. The division of activities between principals and agents depends mostly on the market position. Who gains more from the process will take the risk reduction measure. The least-cost-activity-in monetary terms-to reduce the risk is trust as a reciprocal relation. Trust needs no monitoring nor any other instruments
and therefore does not cost money. Trust is a good “sui generis” (Schuize, 1997: 70) that losses and gains are counted in other than monetary dimensions. Therefore, trust is the important dimension in the tourism industry. The importance has grown with the increased amount of information and the increased velocity of information processing. Trust is the core criterion in defining a network with the least-cost lo reduce the risk of asymmetric information.