Incremental Approaches to Establishing Trust

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We investigate cooperation using an incremental investment game in which the first-mover has the ability to make small, but increasing incremental investments in their counterpart. Our experiment is designed to test whether establishing trust in small increments is more effective than alternatives, including a one-shot investment game, a decrease only condition where the amount the first-mover sends to the second-mover must be less than the amount previously sent, and an unrestricted condition where the first-mover is not restricted by the amount previously sent. Although results were mixed, broadly, iteration affords greater cooperation than one-shot games and, when given the choice, participants seem to prefer to build trust gradually. Implications for institutional design are discussed.


This article was originally published in Experimental Economics, volume 11, issue 4, in 2008.

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