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Is Trust a Bad Investment?

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Author Info
Nava Ashraf
Iris Bohnet
Nikita Piankov

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Abstract

This paper examines whether trust is an investment decision under uncertainty, based on the expectation of trustworthiness, and whether trustworthiness is reciprocity, conditional on one’s counterpart’s behavior. In trust experiments in Russia, South Africa and the United States, two thirds of the subjects who trust do not expect trust to pay monetarily. We find substantial heterogeneity in motivation: Expectations of return account for most of women’s trust, and reciprocity for most of Americans’ trustworthiness. Men’s trust and Russians’ and South Africans’ trustworthiness are significantly related to unconditional kindness as measured by subjects’ behavior in dictator games, us ing a within-subject design.

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Publisher Info
Paper provided by Center for Research in Economics, Management and the Arts (CREMA) in its series CREMA Working Paper Series with number 2004-07.

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Date of creation: May 2004
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Handle: RePEc:cra:wpaper:2004-07

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Related research
Keywords: Trust; kindness; reciprocity; gender; cross-cultural experiments.;

Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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  1. Hong, Kesseley & Bohnet, Iris, 2004. "Status and Distrust: The Relevance of Inequality and Betrayal Aversion," Working Paper Series rwp04-041, Harvard University, John F. Kennedy School of Government. [Downloadable!]
  2. Urs Fischbacher & Simon Gächter, 2006. "Heterogeneous Social Preferences and the Dynamics of Free Riding in Public Goods," IZA Discussion Papers 2011, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  3. René Fahr & Bernd Irlenbusch, 2008. "Identifying personality traits to enhance trust between organisations: an experimental approach," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 29(6), pages 469-487. [Downloadable!]
  4. Benno Torgler & Friedrich Schneider, 2006. "What Shapes Attitudes Toward Paying Taxes? Evidence from Multicultural European Countries," IZA Discussion Papers 2117, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  5. Robert Hoffmann, 2006. "The Cognitive Origins of Social Stratification," Computational Economics, Springer, vol. 28(3), pages 233-249, October. [Downloadable!] (restricted)
  6. Vyrastekova, Jana & Garikipati, Supriya, 2005. "Beliefs and trust : an experiment," Discussion Paper 88, Tilburg University, Center for Economic Research. [Downloadable!]
  7. Catherine Eckel & Rick Wilson, 2006. "Internet cautions: Experimental games with internet partners," Experimental Economics, Springer, vol. 9(1), pages 53-66, April. [Downloadable!] (restricted)
  8. Bohnet, Iris & Zeckhauser, Richard, 2003. "Trust, Risk and Betrayal," Working Paper Series rwp03-041, Harvard University, John F. Kennedy School of Government. [Downloadable!]
    Other versions:
  9. Alessandro Innocenti & Maria Grazia Pazienza, 2006. "Altruism and Gender in the Trust Game," Labsi Experimental Economics Laboratory University of Siena 005, University of Siena. [Downloadable!]
  10. Tomomi Tanaka & Colin F. Camerer & Quang Nguyen, 2006. "Preferences, Poverty and Politics: Experimental and Survey Data from Vietnam," Levine's Bibliography 321307000000000054, UCLA Department of Economics. [Downloadable!]
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