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Building Trust One Gift at a Time

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Author Info
Maroš Servátka () (University of Canterbury)
Steven Tucker () (University of Canterbury)
Radovan Vadovic

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Abstract

This paper reports an experiment evaluating the effect of gift giving on building trust in a relationship. We have nested our explorations in the standard version of the investment game. Our gift treatment includes a dictator stage in which the trustee decides whether to give a gift to the trustor before both of them proceed to play the investment game. We observe that in such case the majority of trustees offer their endowment to trustors. Consequently, receiving a gift significantly increases the amounts sent by trustors when controlling for the differences in payoffs created by it. Trustees are, however, not better off by giving a gift as the increase in the amount sent by trustors is not large enough to offset the trustees’ loss associated with the cost of giving a gift. Our results indicate that a relationship which is initiated by gift giving leads to higher trust and efficiency but at the same time is probably not stable.

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File URL: http://www.econ.canterbury.ac.nz/RePEc/cbt/econwp/0911.pdf
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Publisher Info
Paper provided by University of Canterbury, Department of Economics in its series Working Papers in Economics with number 09/11.

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Length: 24 pages
Date of creation: 17 Jun 2009
Date of revision:
Handle: RePEc:cbt:econwp:09/11

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Related research
Keywords: Experimental economics; gift; investment game; trust; trustworthiness;

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Find related papers by JEL classification:
C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Kreps, David M. & Wilson, Robert, 1982. "Reputation and imperfect information," Journal of Economic Theory, Elsevier, vol. 27(2), pages 253-279, August. [Downloadable!] (restricted)
    Other versions:
  2. Steven D. Levitt & John A. List, 2007. "What Do Laboratory Experiments Measuring Social Preferences Reveal About the Real World?," Journal of Economic Perspectives, American Economic Association, vol. 21(2), pages 153-174, Spring.
  3. Kreps, David M. & Milgrom, Paul & Roberts, John & Wilson, Robert, 1982. "Rational cooperation in the finitely repeated prisoners' dilemma," Journal of Economic Theory, Elsevier, vol. 27(2), pages 245-252, August. [Downloadable!] (restricted)
  4. Guth, Werner & Schmittberger, Rolf & Schwarze, Bernd, 1982. "An experimental analysis of ultimatum bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 367-388, December. [Downloadable!] (restricted)
  5. Huck, Steffen & Ruchala, Gabriele K. & Tyran, Jean-Robert, 2007. "Pricing and Trust," CEPR Discussion Papers 6135, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
    • Steffen Huck & Gabriele K. Ruchala & Jean-Robert Tyran, 2007. "Pricing and Trust," Discussion Papers 07-04, University of Copenhagen. Department of Economics. [Downloadable!]
  6. James Andreoni, 2005. "Trust, Reciprocity, and Contract Enforcement: Experiments on Satisfaction Guaranteed," Levine's Bibliography 666156000000000679, UCLA Department of Economics. [Downloadable!]
  7. Andreoni, James & Samuelson, Larry, 2006. "Building rational cooperation," Journal of Economic Theory, Elsevier, vol. 127(1), pages 117-154, March. [Downloadable!] (restricted)
    Other versions:
  8. repec:att:wimass:192057 is not listed on IDEAS
  9. Maroš Servátka & Steven Tucker & Radovan Vadovic, 2008. "Words Speak Louder Than Money," Working Papers in Economics 08/18, University of Canterbury, Department of Economics. [Downloadable!]
  10. 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)
  11. Maroš Servátka & Steven Tucker & Radovan Vadovic, 2008. "Strategic Use of Trust," Working Papers in Economics 08/11, University of Canterbury, Department of Economics. [Downloadable!]
  12. Servtka, Maros, 2009. "Separating reputation, social influence, and identification effects in a dictator game," European Economic Review, Elsevier, vol. 53(2), pages 197-209, February. [Downloadable!] (restricted)
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This page was last updated on 2009-11-20.

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