These are tough times for trust. Successful marketplaces — indeed, all social systems — require a level of ethical behavior among their participants. The recent arrest of Bernard L. Madoff, accused of bilking thousands of investors in a billion Ponzi scheme, is only the latest incident to diminish trust on Wall Street. Wharton operations and information management professor Maurice E. Schweitzer and G. Richard Shell , professor of legal studies and business ethics, have conducted extensive research on the role of trust in markets. In an interview with Knowledge at Wharton, they explain why even the most sophisticated investors put their faith in Madoff and how his actions have damaged markets in general. Knowledge at Wharton: Why is it that even sophisticated investors are being snookered in Ponzi schemes, still? Maurice Schweitzer: The Madoff scandal is a story about several powerful influence principles working in concert. These are textbook principles. And in this case, you have four that are key.…