Discriminating strategic reciprocity and acquired trust in the repeated trustgame

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Abstract

In repeated trust-game offers made by investors can be attributed to strategic reciprocation-based behavior. However, when a trustee is loyal, personal trust can build up between players, in the same way that lack of positive reciprocation on the part of trustees can motivate investors' distrust. Acquired personal trust or distrust and strategic reciprocation of the opponent's offers have then a cumulative and convergent influence on behavior in the trust game and are not prima facie distinguishable. We propose an experimental protocol which discriminates between these two determinants of trust. We furthermore show that acquired trust is the mere outcome of anonymous repeated interactions taking place during the experiment in the sense that it does not co-vary with an initial and independent baseline disposition to trust among investors: acquired trust crowds out background trust. Moreover, offers are sensitive to the amount and variance of trustees' returns. High returns-rate contribute to increase acquired trust between the players while the volatility of trustees' counter-offers makes them perceive as opportunistic, triggers investors' strategic behavior and detriments the acquisition of personal trust.

Original languageEnglish
Pages (from-to)177-188
Number of pages12
JournalEconomics Bulletin
Volume31
Issue number1
StatePublished - 2011
Externally publishedYes

ASJC Scopus subject areas

  • Economics, Econometrics and Finance (all)

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