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To support trust and trustworthiness: punish, communicate, both, neither?

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  • Rattaphon Wuthisatian

    (Southern Oregon University, USA)

  • Mark Pingle
  • Mark Nichols

    (University of Nevada, Reno, USA)

Abstract

We examine the effects of punishment, communication, and their interaction on trust and trustworthiness. Our findings suggest that, when communication alone is available as an option for the trustor, using it roughly doubles the ability the trustor has to elicit trustworthiness, so communication is not cheap talk. When punishment alone is available, a punishment threat has no significant impact on the marginal ability of trust to elicit trustworthiness. If the two mechanisms are available and implemented together, the choice to punish completely cancels out the positive effect of the choice to communicate. For policy, these findings stress the importance of communication relative to contracts enforced with material penalties.

Suggested Citation

  • Rattaphon Wuthisatian & Mark Pingle & Mark Nichols, 2017. "To support trust and trustworthiness: punish, communicate, both, neither?," Journal of Behavioral Economics for Policy, Society for the Advancement of Behavioral Economics (SABE), vol. 1(1), pages 61-68, February.
    • Handle: RePEc:beh:jbepv1:v:1:y:2017:i:1:p:61-68
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    Cited by:

    1. Eisenkopf, Gerald, 2018. "The long-run effects of communication as a conflict resolution mechanism," Journal of Economic Behavior & Organization, Elsevier, vol. 154(C), pages 121-136.

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    More about this item

    Keywords

    trust; trustworthiness; punishment; communication; cooperation;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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