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Determinants of trust: The role of personal experiences

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  • Schwerter, Frederik
  • Zimmermann, Florian

Abstract

Social interactions pervade daily life and thereby create an abundance of social experiences. Such personal experiences likely shape what we believe and who we are. In this paper, we ask if and how personal experiences from social interactions determine individuals' inclination to trust others? In a laboratory experiment, we manipulate social experiences prior to measuring participants' willingness to trust others. We contrast this situation with a non-social control condition where we keep all aspects of the prior experiences identical, except that we remove the social dimension. Subjects' willingness to trust is substantially higher after a positive social experience relative to a negative social experience. No such effect is obtained in the non-social control condition. Our results cannot be explained by rational learning as well as income and reference point effects. Delving into the underlying mechanisms, we provide evidence that non-standard belief patterns are an important driver of experience effects.

Suggested Citation

  • Schwerter, Frederik & Zimmermann, Florian, 2020. "Determinants of trust: The role of personal experiences," Games and Economic Behavior, Elsevier, vol. 122(C), pages 413-425.
    • Handle: RePEc:eee:gamebe:v:122:y:2020:i:c:p:413-425
    DOI: 10.1016/j.geb.2020.05.002
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    3. Isabel Ruiz & Carlos Vargas-Silva, 2022. "The legacies of armed conflict: insights from stayees and returning forced migrants," WIDER Working Paper Series wp-2022-17, World Institute for Development Economic Research (UNU-WIDER).
    4. Benjamin Enke & Frederik Schwerter & Florian Zimmermann, 2019. "Associative Memory and Belief Formation," CESifo Working Paper Series 7916, CESifo.
    5. Cassar, Lea & Armouti-Hansen, Jesper & Dereky, Anna & Engl, Florian, 2021. "Efficiency Wages with Motivated Agents," CEPR Discussion Papers 15723, C.E.P.R. Discussion Papers.
    6. Friehe, Tim & Do, Vu Mai Linh, 2023. "Do crime victims lose trust in others? Evidence from Germany," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 105(C).
    7. Saidi, Farzad & Alfaro, Laura & Faia, Ester & Lamersdorf, Nora, 2020. "Social Interactions in Pandemics: Fear, Altruism, and Reciprocity," CEPR Discussion Papers 14716, C.E.P.R. Discussion Papers.
    8. Jesper Armouti-Hansen & Lea Cassar & Anna Deréky & Florian Engl, 2020. "Efficiency Wages with Motivated Agents," CESifo Working Paper Series 8474, CESifo.
    9. Roychowdhury, Punarjit, 2021. "Too unwell to trust? The effect of mental health on social trust in Europe," Economics & Human Biology, Elsevier, vol. 42(C).
    10. Dung Phuong Hoang & Ngoc Thang Doan & Thi Hong Hai Nguyen, 2022. "An expanded model of bank reputation in the context of the Covid-19 crisis: a vietnamese contribution," SN Business & Economics, Springer, vol. 2(7), pages 1-28, July.
    11. Daicia Price & Tore Bonsaksen & Mary Ruffolo & Janni Leung & Vivian Chiu & Hilde Thygesen & Mariyana Schoultz & Amy Ostertun Geirdal, 2021. "Perceived Trust in Public Authorities Nine Months after the COVID-19 Outbreak: A Cross-National Study," Social Sciences, MDPI, vol. 10(9), pages 1-14, September.
    12. Polipciuc, Maria, 2022. "Group identity and betrayal: decomposing trust," ROA Research Memorandum 002, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    13. Daniel Chigudu, 2022. "Post Burundi’s armed conflict and trust issues in land redistribution: Towards peacebuilding," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 11(4), pages 300-309, June.

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    More about this item

    Keywords

    Determinants of trust; Experiences; Beliefs; Non-standard learning; Experiments;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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