the whole reason trust doesn't work in online games is because there is no such thing as punishment ...

and there can't be ...

in the real world, people get punished when they do bad things. If you dont give the sword back to the gang member down the street, the other guy goes and gets a gun, shows up at your door when you aren't expecting him and shoots your whole family ... which doesn't stop you from doing it ... but it stops the next guy. If you don't give the car back to the dealer when you test drive it, the cops come and arrest you for grand theft auto.

But there are 2 things to note here, in the real world punishment is not always right, is often very unfair, and can spiral out of hand (nazi germany anyone, or even just the percentage of blacks in us prisons, or poor people being taken advantage of my criminals, or old people by con artists, or young people by bullies). Any system of power will be abused ...

But an online system that allows real punishment will quickly spiral out of control, because there is not a 15-20 year period of being raised (trained, programmed) to act in acceptable ways such that a large percentage of the populous agree on many of the primary aspects of what is acceptable. We don't agree on the rules of sex, mairage, vice, musical taste, fasion, etc. But we largely agree on the rules of murder, rape, theft (somewhat), harasment (somewhat), personal space (somewhat), etc ...

In an online system, if you allow such things, the enforcers are as likely to be a mafia style controling class as a force of good. If you don't allow such things, then there can never be trust (because there is no consequence to actions).

Xai nailed it... to a wall...
but on a slightly lighter note... i think its a great idea and to stop morons from making lend-to ripoffs the lend box should only be 1 way like a trade box only with the lenders item and a accept button for the lender... then u cant offer money for a lend... that would be stupid... really really stupid...

Just make a Lend menu, that will let you set a timelimit for that person to "keep" your item and flag it as a no-drop and no-trade, after that time expires, the item automagically returns to the lender.

i think it'd be better to allow people to rip others off, but that person could always call the police (or put out a bounty, or tell people about it so the guy who ripped them off is known as a thief).

The game could make sure trades are visible to other nearby players. That way, people can at least act as witnesses and the thief's reputation is at stake. Apart from that though, I think learning who to trust and who not to is a key part of the game. These are often lawless worlds we're simulating, after all.

could have trade history for a player.

The lend function was a simple solution, I don't think there can be anything against it. The 'selling borrowed item' scenario cannot occur, because the borrower can't put the borrowed item on transaction screen.

So if I borrow my sword to someone for a mission, on my item screen, the icon for that item will be semitransparent (so I can't use the slot for something else, it is a cost for lending items, but it guarantees that the lender cannot abuse the lend function to store extra items in the 'return item queue'). When the lender click on the semitransparent icon the lender can see who borrowed it and can click on a button to have it returned immediately. To prevent a borrower from becoming naked as the lender claims the lent item, the previous equipment will be equipped.

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Just make a Lend menu, that will let you set a timelimit for that person to "keep" your item and flag it as a no-drop and no-trade, after that time expires, the item automagically returns to the lender.

I agree with this, but the players can abuse this to put items in the return queue to make room for backpack slots. If you want to lend someone something long term, just lend it in person, and then put the semi-transparent item in the bank.