Document Type
Article
Publication Date
2013
Abstract
Many economic interactions are characterized by “all or nothing” action spaces that may limit a demonstrable index of trust and, therefore, the propensity to reciprocate. In two experimental trust games, the action space governing investments was manipulated to examine the effects on investments and reciprocity. In the continuous game the investor could invest any amount between 0 and 10, while in the binary game the investor could invest either 0 or 10. In both games, the trustee received the tripled investment and then could return any amount back to the investor. Investors invested significantly more in the binary game than in the continuous game. However, higher investments in the binary game did not lead to more reciprocity. To the contrary, conditional on investment of 10, on average trustees returned significantly less in the binary game than in the continuous game.
Recommended Citation
Schniter, E., Sheremeta, R.M., & Shields, T.W. (2013). Limitations to signaling trust with all or nothing investments. ESI Working Paper 13-24. Retrieved from http://digitalcommons.chapman.edu/esi_working_papers/36
Comments
Working Paper 13-24