Trust and Financial Trades: Lessons from an Investment Game Where Reciprocators Can Hide Behind Probabilities
AbstractIn this paper we show that if a very small, exogenously given probability of terminating the exchange is introduced in an elementary investment game, reciprocators play more often the defection strategy. Everything happens as if they "hide behind probabilities" in order to break the trust relationship. Investors do no not seem able to internalize the reciprocators' change in behavior. This could explain why trades involving an exogenous risk of value destruction, such as financial transactions, provide an unfavorable environment for trust-building
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by ESSEC Research Center, ESSEC Business School in its series ESSEC Working Papers with number DR 10007.
Length: 16 pages
Date of creation: May 2010
Date of revision:
Experimental Economics; Financial Transactions; Investment Game; Objective Risk; Trust;
Other versions of this item:
- Radu Vranceanu & Angela Sutan & Delphine Dubart, 2011. "Trust and financial trades : lessons from an investment game wher reciprocators can hide behind probabilities," Post-Print hal-00572384, HAL.
- C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- G00 - Financial Economics - - General - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-05-29 (All new papers)
- NEP-CBE-2010-05-29 (Cognitive & Behavioural Economics)
- NEP-EXP-2010-05-29 (Experimental Economics)
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.:
- Berg Joyce & Dickhaut John & McCabe Kevin, 1995. "Trust, Reciprocity, and Social History," Games and Economic Behavior, Elsevier, vol. 10(1), pages 122-142, July.
- Radu Vranceanu & Delphine Dubart & Maxime Laot, 2010.
"Une échelle de mesure de la connaissance en raisonnement économique et résultats d'une enquête menée en décembre 2009,"
- Vranceanu, Radu & Laot, Maxime & Dubart, Delphine, 2010. "Une échelle de mesure de la connaissance en raisonnement économique et résultats d'une enquête menée en décembre 2009," ESSEC Working Papers DR 10001, ESSEC Research Center, ESSEC Business School.
- Crifo, Patricia & Mottis, Nicolas, 2010.
"SRI Analysis and Asset Management: Independent or Convergent? A Field Study on the French Market,"
ESSEC Working Papers
DR 10006, ESSEC Research Center, ESSEC Business School.
- Patricia Crifo & Nicolas Mottis, 2010. "SRI analysis and asset management : independent or convergent ? : A field study on the French market," Post-Print hal-00572379, HAL.
- Batista, Catia & Potin, Jacques, 2008. "International Specialization and the Return to Capital, 1976-2000," ESSEC Working Papers DR 08001, ESSEC Research Center, ESSEC Business School.
- Batista, Catia & Potin, Jacques, 2006. "Stages of Diversification and Capital Accumulation in an Heckscher-Ohlin World, 1975-1995," ESSEC Working Papers DR 06008, ESSEC Research Center, ESSEC Business School.
- Jason Dana & Roberto Weber & Jason Kuang, 2007. "Exploiting moral wiggle room: experiments demonstrating an illusory preference for fairness," Economic Theory, Springer, vol. 33(1), pages 67-80, October.
- Besancenot, Damien & Vranceanu, Radu, 2011.
"Banks' risk race: A signaling explanation,"
International Review of Economics & Finance,
Elsevier, vol. 20(4), pages 784-791, October.
- Radu Vranceanu & Damien Besancenot, 2010. "Banks' risk race: A signaling explanation," Post-Print hal-00554719, HAL.
- Besancenot, Damien & Vranceanu, Radu, 2009. "Banks’ risk race: a signaling explanation," ESSEC Working Papers DR 09007, ESSEC Research Center, ESSEC Business School.
- Damien Besancenot & Radu Vranceanu, 2011. "Banks Risk Race: A Signaling Explanation," CEPN Working Papers halshs-00424214, HAL.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sophie Magnanou).
If references are entirely missing, you can add them using this form.