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Trust and Cheating

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Author Info

  • Butler, Jeffrey V.

    ()
    (Einaudi Institute for Economics and Finance)

  • Giuliano, Paola

    ()
    (University of California, Los Angeles)

  • Guiso, Luigi

    ()
    (Einaudi Institute for Economics and Finance)

Abstract

When we take a cab we may feel cheated if the driver takes an unnecessarily long route despite the lack of a contract or promise to take the shortest possible path. Is our decision to take the cab affected by our belief that we may end up feeling cheated? Is the behavior of the driver affected by his beliefs about what we consider cheating? We address these questions in the context of a trust game by asking participants directly about their notions of cheating. We find that: i) both parties to a trust exchange have implicit notions of what constitutes cheating even in a context without promises or messages; ii) these notions are not unique – the vast majority of senders would feel cheated by a negative return on their trust/investment, whereas a sizable minority defines cheating according to an equal split rule; iii) these implicit notions affect the behavior of both sides to the exchange in terms of whether to trust or cheat and to what extent. Finally, we show that individuals’ notions of what constitutes cheating can be traced back to two classes of values instilled by parents: cooperative and competitive. The first class of values tends to soften the notion while the other tightens it.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6961.

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Length: 54 pages
Date of creation: Oct 2012
Date of revision:
Handle: RePEc:iza:izadps:dp6961

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Keywords: trust; trustworthiness; social norms; culture; cheating;

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References

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  1. Ernst Fehr, 2009. "On the economics and biology of trust," IEW - Working Papers, Institute for Empirical Research in Economics - University of Zurich 399, Institute for Empirical Research in Economics - University of Zurich.
  2. Fehr, Ernst & Schmidt, Klaus M., 1998. "A Theory of Fairness, Competition and Cooperation," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1812, C.E.P.R. Discussion Papers.
  3. Charness, Gary & Rabin, Matthew, 2002. "Understanding Social Preferences with Simple Tests," Department of Economics, Working Paper Series, Department of Economics, Institute for Business and Economic Research, UC Berkeley qt3d04q5sm, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  4. Lise Vesterlund, 2011. "Gender Differences in Bargaining Outcomes: A Field Experiment on Discrimination," Working Papers, University of Pittsburgh, Department of Economics 450, University of Pittsburgh, Department of Economics, revised Jan 2011.
  5. Pierpaolo Battigalli & Martin Dufwenberg, 2007. "Guilt in Games," American Economic Review, American Economic Association, American Economic Association, vol. 97(2), pages 170-176, May.
  6. Eckel, Catherine C & Grossman, Philip J, 1998. "Are Women Less Selfish Than Men? Evidence from Dictator Experiments," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 108(448), pages 726-35, May.
  7. Bohnet, Iris & Zeckhauser, Richard, 2004. "Trust, risk and betrayal," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 55(4), pages 467-484, December.
  8. Glaeser, Edward Ludwig & Laibson, David I. & Scheinkman, Jose A. & Soutter, Christine L., 2000. "Measuring Trust," Scholarly Articles 4481497, Harvard University Department of Economics.
  9. Matthew Rabin., 1992. "Incorporating Fairness into Game Theory and Economics," Economics Working Papers, University of California at Berkeley 92-199, University of California at Berkeley.
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  11. Cox, James C., 2004. "How to identify trust and reciprocity," Games and Economic Behavior, Elsevier, Elsevier, vol. 46(2), pages 260-281, February.
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Cited by:
  1. Oriana Bandiera & Luigi Guiso & Andrea Prat & Raffaella Sadun, 2011. "What Do CEOs Do?," EIEF Working Papers Series 1101, Einaudi Institute for Economics and Finance (EIEF), revised Oct 2010.
  2. Eleonora Patacchini & Edoardo Rainone, 2014. "The Word on Banking - Social Ties, Trust, and the Adoption of Financial Products," EIEF Working Papers Series 1404, Einaudi Institute for Economics and Finance (EIEF), revised Jul 2014.
  3. Conzo, Pierluigi, 2014. "Trust and Cheating in Sri Lanka: The Role of Experimentally-Induced Emotions about Tsunami," Department of Economics and Statistics Cognetti de Martiis. Working Papers, University of Turin 201403, University of Turin.
  4. Luigi Guiso, 2012. "Trust & Insurance Markets," EIEF Working Papers Series 1207, Einaudi Institute for Economics and Finance (EIEF), revised Jul 2012.
  5. Dessi, Roberta & Monin, Benoît, 2012. "Noblesse Oblige? Moral Identity and Prosocial Behavior in the Face of Selfishness," TSE Working Papers, Toulouse School of Economics (TSE) 12-347, Toulouse School of Economics (TSE).
  6. Dessi, Roberta & Monin, Benoît, 2012. "Noblesse Oblige? Moral Identity and Prosocial Behavior in the Face of Selfishness," IDEI Working Papers, Institut d'Économie Industrielle (IDEI), Toulouse 750, Institut d'Économie Industrielle (IDEI), Toulouse.

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