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Assigning Intentions when Actions Are Unobservable: The Impact of Trembling in the Trust Game

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Author Info
James C. Cox () (Department of Economics, Andrew Young School of Policy Studies, Georgia State University)
Cary A. Deck () (Department of Economics, University of Arkansas)

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Abstract

This article reports laboratory experiments investigating behavior in which players may make inferences about the intentions behind others' prior actions based on higher- or lower-accuracy information about those actions. We investigate a trust game with first mover trembling, a game in which nature determines whether the first mover's decision is implemented or reversed. The results indicate that second movers give first movers the benefit of the doubt. However, first movers do not anticipate this response. Ultimately, it appears that subjects are thinking on at least three levels when making decisions: they are concerned with their own material well-being, the trustworthiness of their counterpart, and how their own actions will be perceived.

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Publisher Info
Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 73 (2006)
Issue (Month): 2 (October)
Pages: 307–314
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Handle: RePEc:sej:ancoec:v:73:2:y:2006:p:307-314

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Find related papers by JEL classification:
C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
D64 - Microeconomics - - Welfare Economics - - - Altruism
D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

References listed on IDEAS
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  1. McCabe, Kevin A. & Rigdon, Mary L. & Smith, Vernon L., 2003. "Positive reciprocity and intentions in trust games," Journal of Economic Behavior & Organization, Elsevier, vol. 52(2), pages 267-275, October. [Downloadable!] (restricted)
  2. Guth, Werner & Tietz, Reinhard, 1990. "Ultimatum bargaining behavior : A survey and comparison of experimental results," Journal of Economic Psychology, Elsevier, vol. 11(3), pages 417-449, September. [Downloadable!] (restricted)
  3. Cox, James C., 2004. "How to identify trust and reciprocity," Games and Economic Behavior, Elsevier, vol. 46(2), pages 260-281, February. [Downloadable!] (restricted)
  4. James C. Cox & Cary A. Deck, 2006. "When Are Women More Generous than Men?," Economic Inquiry, Oxford University Press, vol. 44(4), pages 587-598, October. [Downloadable!] (restricted)
    Other versions:
  5. Cary A. Deck, 2001. "A Test of Game-Theoretic and Behavioral Models of Play in Exchange and Insurance Environments," American Economic Review, American Economic Association, vol. 91(5), pages 1546-1555, December. [Downloadable!] (restricted)
  6. Engelmann,Dirk & Strobel,Martin, 2002. "Inequality Aversion, Efficiency, and Maximin Preferences in Simple Distribution Experiments," Research Memoranda 015, Maastricht : MERIT, Maastricht Economic Research Institute on Innovation and Technology. [Downloadable!]
    Other versions:
  7. Gary E. Bolton & Axel Ockenfels, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March. [Downloadable!] (restricted)
  8. Berg Joyce & Dickhaut John & McCabe Kevin, 1995. "Trust, Reciprocity, and Social History," Games and Economic Behavior, Elsevier, vol. 10(1), pages 122-142, July. [Downloadable!] (restricted)
  9. Iris Bohnet & Bruno S. Frey & Steffen Huck, . "More Order with Less Law: On Contract Enforcement, Trust, and Crowding," IEW - Working Papers iewwp052, Institute for Empirical Research in Economics - IEW. [Downloadable!]
  10. James C. Cox & Cary A. Deck, 2005. "On the Nature of Reciprocal Motives," Economic Inquiry, Oxford University Press, vol. 43(3), pages 623-635, July. [Downloadable!] (restricted)
  11. Guth, Werner & Huck, Steffen & Muller, Wieland, 2001. "The Relevance of Equal Splits in Ultimatum Games," Games and Economic Behavior, Elsevier, vol. 37(1), pages 161-169, October. [Downloadable!] (restricted)
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