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Trust and Trustworthiness under the Prospect Theory: A field experiment in Vietnam

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  • Quang Nguyen

    (Division of Economics - Nanyang Technological University)

  • Marie Claire Villeval

    ()
    (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure (ENS) - Lyon - PRES Université de Lyon - Université Jean Monnet - Saint-Etienne - Université Claude Bernard - Lyon I)

  • Hui Xu

    (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure (ENS) - Lyon - PRES Université de Lyon - Université Jean Monnet - Saint-Etienne - Université Claude Bernard - Lyon I)

Abstract

We study the influence of risk and time preferences on trust and trustworthiness by conducting a field experiment in Vietnamese villages and by estimating the parameters of the Cumulative Prospect Theory and of quasi-hyperbolic time preferences. We find that while probability sensitivity or risk aversion do not affect trust, loss aversion influences trust indirectly by lowering the expectations of return. Also, more risk averse and less present biased participants are found to be trustworthier. The experience of receiving remittances influences behavior and a longer exposure to a collectivist economy tend to reduce trust and trustworthiness.

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Bibliographic Info

Paper provided by HAL in its series Working Papers with number halshs-00730609.

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Date of creation: 10 Sep 2012
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Handle: RePEc:hal:wpaper:halshs-00730609

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Keywords: Trust; trustworthiness ; risk preferences ; time preferences ; Cumulative Prospect Theory ; Vietnam ; field experiment;

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Cited by:
  1. Quang Nguyen & Marie Claire Villeval & Hui Xu, 2012. "Trust and Trustworthiness under the Prospect Theory: A field experiment in Vietnam," Working Papers halshs-00730609, HAL.
  2. Giuseppe Albanese & Guido de Blasio & Paolo Sestito, 2013. "Trust and preferences: evidence from survey data," Temi di discussione (Economic working papers), Bank of Italy, Economic Research and International Relations Area 911, Bank of Italy, Economic Research and International Relations Area.

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