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The Impact of Social Value Orientation and Risk Attitudes on Trust and Reciprocity

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  • Kiridaran Kanagaretnam
  • Stuart Mestelman
  • Khalid Nainar
  • Mohamed Shehata

Abstract

Prior experimental studies provide evidence that the levels of trust and reciprocity are highly susceptible to individuals’ preferences towards payoffs, prior experience, capacity to learn more about personal characteristics of each other and social distance. The objective of this study is to examine whether social value orientation as developed by Griesinger and Livingstone (1973) and Liebrand (1984) and risk preferences can help to account for the variability of trust and trustworthiness. We use the Berg et al. (1995) investment game to generate indices of trust and reciprocity. Prior to their participation in the investment game, all subjects participated in two other games. One is used to measure their social value orientation (a measure of other regarding behavior) and the second to measure risk attitudes. These variables are introduced as treatments in the analysis of the trust and reciprocity data. In addition to these preference related variables, gender is introduced to capture any differences between men and women which may not be encompassed by value orientation and risk attitudes. The statistical analysis indicates that the social value orientation measure significantly accounts for variation in trust and reciprocity. As well, the level of trust exhibited by an investor significantly affects the reciprocity of the responders and this measure of trust interacts with social value orientation. Individuals who are highly pro-social reciprocate more as the sender’s trust increases, while those who are highly pro-self reciprocate less as the sender’s trust increases. For this sample of participants, the gender variable does not capture any differences in the behavior of men and women that is not already reflected by the differences captured by their value orientations. Risk attitudes do not significantly account for variation in trusting behavior, except for the case where individuals have neither strongly pro-social nor pro-self social value orientations. In this case, more riskseeking individuals are more trusting.

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Bibliographic Info

Paper provided by McMaster University in its series Department of Economics Working Papers with number 2008-06.

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Length: 43 pages
Date of creation: May 2009
Date of revision:
Handle: RePEc:mcm:deptwp:2008-06

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Keywords: Trust; Reciprocity; Social Value Orientation; Risk Attitudes; Gender;

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References

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Citations

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Cited by:
  1. Anne Corcos François Pannequin & Sacha Bourgeois-Gironde, 2012. "Aversions to trust," Post-Print ijn_00734564, HAL.
  2. Kamas, Linda & Preston, Anne, 2012. "Distributive and reciprocal fairness: What can we learn from the heterogeneity of social preferences?," Journal of Economic Psychology, Elsevier, vol. 33(3), pages 538-553.
  3. Rachel Croson & Uri Gneezy, 2009. "Gender Differences in Preferences," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 448-74, June.
  4. repec:hal:journl:ijn_00734563 is not listed on IDEAS
  5. Fairley, Kim & Sanfey, Alan & Vyrastekova, Jana & Weitzel, Utz, 2012. "Social risk and ambiguity in the trust game," MPRA Paper 42302, University Library of Munich, Germany.
  6. Sacchetti, Silvia & Tortia, Ermanno, 2012. "The internal and external governance of cooperatives: the effective membership and consistency of value," AICCON Working Papers 111-2012, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
  7. Kurt A. Ackermann & Jürgen Fleiß & Ryan O. Murphy, 2013. "Reciprocity as an individual difference," Working Paper Series, Social and Economic Sciences 2013-05, Faculty of Social and Economic Sciences, Karl-Franzens-University Graz.
  8. Harvey, Michael & Reiche, B. Sebastian & Moeller, Miriam, 2011. "Developing effective global relationships through staffing with inpatriate managers: The role of interpersonal trust," Journal of International Management, Elsevier, vol. 17(2), pages 150-161, June.
  9. Kiridaran Kanagaretnam & Stuart Mestelman & Khalid Nainar & Mohamed Shehata, 2009. "The Impact of Empowering Investors on Trust and Trustworthiness," Department of Economics Working Papers 2009-16, McMaster University.
  10. Smith, John, 2010. "The endogenous nature of the measurement of social preferences," MPRA Paper 23282, University Library of Munich, Germany.
  11. Mentzakis, Emmanouil & Mestelman, Stuart, 2013. "Hypothetical bias in value orientations ring games," Economics Letters, Elsevier, vol. 120(3), pages 562-565.
  12. Evans, Anthony M. & Athenstaedt, Ursula & Krueger, Joachim I., 2013. "The development of trust and altruism during childhood," Journal of Economic Psychology, Elsevier, vol. 36(C), pages 82-95.

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