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Trust and the Reference Point for Trustworthiness in Gulf and Western Countries

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  • Bohnet, Iris

    (Harvard University)

  • Hermann, Benedikt

    (European Commission)

  • Zeckhauser, Richard

    (Harvard University)

Abstract

Why is private investment so low in Gulf compared to Western countries? We investigate cross-regional differences in trust and reference points for trustworthiness as possible factors. Experiments controlling for cross-regional differences in institutions and beliefs about trustworthiness reveal that Gulf citizens pay much more than Westerners to avoid trusting, and hardly respond when returns to trusting change. These differences can be explained by subjects' gain/loss utility relative to their region's reference point for trustworthiness. The relation-based production of trust in the Gulf induces higher levels of trustworthiness, albeit within groups, than the rule-based interactions prevalent in the West.

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Paper provided by Harvard University, John F. Kennedy School of Government in its series Working Paper Series with number rwp09-015.

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Date of creation: Jun 2009
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Handle: RePEc:ecl:harjfk:rwp09-015

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Citations

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Cited by:
  1. Kvaløy, Ola & Luzuriaga, Miguel, 2014. "A trust game in loss domain," UiS Working Papers in Economics and Finance 2014/6, University of Stavanger.
  2. Simon Gaechter & Benedikt Herrmann & Christian Thoeni, 2010. "Culture and Cooperation," Discussion Papers 2010-09, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  3. Jason A. Aimone & Daniel Houser, 2012. "Harnessing the Benefits of Betrayal Aversion," Working Papers 1030, George Mason University, Interdisciplinary Center for Economic Science.
  4. Francisco Campos-Ortiz & Louis Putterman & T. K. Ahn & Loukas Balafoutas & Mongoljin Batsaikhan & Matthias Sutter, 2012. "Security of Property as a Public Good: Institutions, Socio-Political Environment and Experimental Behavior in Five Countries," Working Papers 2012-12, Banco de México.
  5. Timothy C. Salmon & Danila Serra, 2013. "Does Social Judgement Diminish Rule Breaking?," Economics Series Working Papers WPS/2013-05, University of Oxford, Department of Economics.
  6. Binzel, Christine & Fehr, Dietmar, 2013. "Social Distance and Trust: Experimental Evidence from a Slum in Cairo," IZA Discussion Papers 7183, Institute for the Study of Labor (IZA).
  7. Dreber, Anna & Rand, David & Wernerfelt, Nils & Worrell, Peter & Zeckhauser, Richard, 2013. "The Decisions of Entrepreneurs and Their Agents: Revealed Levels of Risk Aversion and Betrayal Aversion," Working Paper Series rwp13-016, Harvard University, John F. Kennedy School of Government.
  8. de Meza, David Emmanuel & Irlenbusch, Bernd & Reyniers, Diane, 2010. "Disclosure, Trust and Persuasion in Insurance Markets," IZA Discussion Papers 5060, Institute for the Study of Labor (IZA).
  9. Basher, Syed Abul & Fachin, Stefano, 2011. "The long-run relationship between savings and investment in oil-exporting developing countries: A case study of the Gulf Arab States," MPRA Paper 29077, University Library of Munich, Germany.
  10. Jason Aimone & Daniel Houser, 2012. "What you don’t know won’t hurt you: a laboratory analysis of betrayal aversion," Experimental Economics, Springer, vol. 15(4), pages 571-588, December.
  11. Breuer, Janice Boucher & McDermott, John, 2012. "Culture, caution, and trust," Journal of Development Economics, Elsevier, vol. 97(1), pages 15-23.

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