It used to be that the main reason why governments exist is because of market failures. Well, that is true. Then again, it could also be because we don't live in a utopian world where we don't worry about our rights and our possessions and where we trust each other so much. That's why government exists because sometimes other people don't respect other people's rights and properties.
In their latest paper in The Quarterly Journal of Economics entitled, "Regulation and Distrust," Philippe Aghion, Yann Algan, Pierre Cahuc and Andrei Shleifer has empirical proof that this is indeed the case on why government regulations exist:
"Distrust creates public demand for regulation, whereas regulation in turn discourages formation of trust. A key implication of this model is that individuals in low-trust countries want more government intervention even though they know the government is corrupt. We test this and other implications of the model using country- and individual-level data on trust and beliefs about the role of government, as well as on changes in beliefs during the transition from socialism. In a cross section of countries, government regulation is strongly negatively correlated with measures of trust."
Sometimes in economics, it's difficult to measure preferences or values. So immediately you'd be curious as to how they measure trust. They actually use a very interesting (and ongoing) dataset, The World Values Survey (WVS):
"The WVS is an international social survey consisting of four main waves, 1981–1984, 1990–93, 1995, and 1999–2003, denoted henceforth 1981, 1990, 1995, and 2000. This survey provides a range of indicators of distrust in others, in markets, and in institutions for a large sample of countries."
So I commend the authors for an ingenious way of making use of this dataset for a subject that is quite relevant. And the message of which, of course, goes without saying. We go back to why there are institutions--why there is rule of law. These things are simply a part of why government is there. Man seems inherently not that trustworthy. And the only way for us to sleep well at night is to have these regulations in place.
Never mind if the trust wasn't there in the first place. Institutions will place that trust and make sure that that will stay in place.