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You have to evaluate the entire chain of trust before making a decision, not just the node with which you interact directly. For instance, your neighbor could've been fooled (good speech, placebo effect, or perhaps your neighbor is just naive) by the same snake oil salesman you know to be a fake. If you buy the oil from your neighbor based on the fact that you trust him you're just as screwed.
People basing their decisions entirely on the level of trust they have in adjacent nodes is, for example, what makes Ponzi schemes so successful.
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