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Abstract

This paper reports on an experiment studying the effectiveness of two types of mechanisms for promoting trust: pecuniary and non-pecuniary as well as their mutual interaction. Our data provide evidence that both mechanisms significantly enhance trust in comparison to the standard investment game. However, we find that the pecuniary mechanism performs significantly worse than the non-pecuniary one. Our results also point to the fact that pecuniary mechanism, which depends on monetary incentives, can be counterproductive when combined with mechanism which relies primarily on psychological incentives.

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File URL: http://www.econ.canterbury.ac.nz/RePEc/cbt/econwp/0818.pdf
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Bibliographic Info

Paper provided by University of Canterbury, Department of Economics and Finance in its series Working Papers in Economics with number 08/18.

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Length: 29 pages
Date of creation: 29 Oct 2008
Date of revision:
Handle: RePEc:cbt:econwp:08/18

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Keywords: Communication; Deposit; Experimental economics; Trust; Trustworthiness;

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References

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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Talk, trust & inequality
    by chris dillow in Stumbling and Mumbling on 2011-04-27 11:30:45
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Maroš Servátka & Steven Tucker & Radovan Vadovič, 2011. "Building Trust—One Gift at a Time," Games, MDPI, Open Access Journal, vol. 2(4), pages 412-433, September.
  2. Martin Dufwenberg & Maroš Servátka & Radovan Vadovič, 2012. "ABC on Deals," Working Papers in Economics 12/14, University of Canterbury, Department of Economics and Finance.
  3. James C. Cox & Maroš Servátka & Radovan Vadovic, 2009. "Saliency of Outside Options in the Lost Wallet Game," Working Papers in Economics 09/03, University of Canterbury, Department of Economics and Finance.
  4. Cary Deck & Maroš Servátka & Steven Tucker, 2013. "An examination of the effect of messages on cooperation under double-blind and single-blind payoff procedures," Experimental Economics, Springer, vol. 16(4), pages 597-607, December.
  5. Andries Richter & Daan van Soest & Johan Grasman, 2013. "Contagious Cooperation, Temptation, and Ecosystem Collapse," Working Papers 2013.36, Fondazione Eni Enrico Mattei.
  6. Ben-Ner, Avner & Putterman, Louis & Ren, Ting, 2011. "Lavish returns on cheap talk: Two-way communication in trust games," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(1), pages 1-13, February.

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