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Presents or investments? An experimental analysis

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  • Gneezy, Uri
  • Guth, Werner
  • Verboven, Frank

Abstract

Individuals frequently transfer commodities without an explicit contract or an implicit enforcement mechanism. We design an experiment to study whether such commodity transfers can be viewed as investments based on trust and reciprocity, or whether they rather resemble presents with distributional intentions. Our experiment essentially modifies Berg et al.'s investment game by introducing an upper bound to what a contributor can be repaid afterwards. By varying this upper bound, extreme situations such as unrestricted repayment and no repayment (dictator giving) can be approximated without altering the verbal instructions otherwise. Our results show that individuals contribute more when large repayments are feasible. This is consistent with the trust and reciprocity hypothesis. Although distributional concerns in some contributions can be traced, they are not nearly close to a preference for equal payoffs.
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(This abstract was borrowed from another version of this item.)

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  • Gneezy, Uri & Guth, Werner & Verboven, Frank, 2000. "Presents or investments? An experimental analysis," Journal of Economic Psychology, Elsevier, vol. 21(5), pages 481-493, October.
  • Handle: RePEc:eee:joepsy:v:21:y:2000:i:5:p:481-493
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    Cited by:

    1. Tan, Jonathan H.W. & Vogel, Claudia, 2008. "Religion and trust: An experimental study," Journal of Economic Psychology, Elsevier, vol. 29(6), pages 832-848, December.
    2. Cochard, Francois & Nguyen Van, Phu & Willinger, Marc, 2004. "Trusting behavior in a repeated investment game," Journal of Economic Behavior & Organization, Elsevier, vol. 55(1), pages 31-44, September.
    3. Mak, Vincent & Zwick, Rami, 2009. ""Confidentially yours": Restricting information flow between trustees enhances trust-dependent transactions," Journal of Economic Behavior & Organization, Elsevier, vol. 70(1-2), pages 142-154, May.
    4. Robert Dur & Jan Tichem, 2012. "Social Relations and Relational Incentives," Tinbergen Institute Discussion Papers 12-054/1, Tinbergen Institute.
    5. Benjamin Feigenberg & Erica M. Field & Rohini Pande, 2010. "Building Social Capital Through MicroFinance," NBER Working Papers 16018, National Bureau of Economic Research, Inc.
    6. Benjamin Ho, 2012. "Apologies as Signals: With Evidence from a Trust Game," Management Science, INFORMS, vol. 58(1), pages 141-158, January.
    7. Werner Güth & M. Vittoria Levati & Matteo Ploner, 2008. "The Impact of Payoff Interdependence on Trust and Trustworthiness," German Economic Review, Verein für Socialpolitik, vol. 9, pages 87-95, February.
    8. Chaudhuri, Ananish & Sopher, Barry & Strand, Paul, 2002. "Cooperation in social dilemmas, trust and reciprocity," Journal of Economic Psychology, Elsevier, vol. 23(2), pages 231-249, April.
    9. Francesco Farina & Niall O'Higgins & Patrizia Sbriglia, 2008. "Eliciting motives for trust and reciprocity by attitudinal and behavioural measures," Labsi Experimental Economics Laboratory University of Siena 021, University of Siena.
    10. Matthias Fahn & Anne Schade & Katharina Schüßler, 2017. "What Drives Reciprocal Behavior? The Optimal Provision of Incentives over the Course of Careers," CESifo Working Paper Series 6635, CESifo Group Munich.
    11. Greiner, Ben & Vittoria Levati, M., 2005. "Indirect reciprocity in cyclical networks: An experimental study," Journal of Economic Psychology, Elsevier, vol. 26(5), pages 711-731, October.
    12. Charness, Gary & Cobo-Reyes, Ramón & Jiménez, Natalia, 2008. "An investment game with third-party intervention," Journal of Economic Behavior & Organization, Elsevier, vol. 68(1), pages 18-28, October.
    13. Woods, Daniel & Servátka, Maroš, 2016. "Nice to You, Nicer to Me: Does Self-Serving Generosity Diminish the Reciprocal Response?," MPRA Paper 74565, University Library of Munich, Germany.
    14. Dufwenberg, Martin & Kirchsteiger, Georg, 2004. "A theory of sequential reciprocity," Games and Economic Behavior, Elsevier, vol. 47(2), pages 268-298, May.
    15. Hong, Fuhai & Hossain, Tanjim & List, John A., 2015. "Framing manipulations in contests: A natural field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 118(C), pages 372-382.
    16. Malhotra, Deepak, 2004. "Trust and reciprocity decisions: The differing perspectives of trustors and trusted parties," Organizational Behavior and Human Decision Processes, Elsevier, vol. 94(2), pages 61-73, July.
    17. MICHAEL R. CARTER & Marco Castillo, 2002. "The Economic Impacts of Altruism, Trust and Reciprocity: An Experimental Approach to Social Capital," Wisconsin-Madison Agricultural and Applied Economics Staff Papers 448, Wisconsin-Madison Agricultural and Applied Economics Department.
    18. Dufwenberg, Martin, 1999. "Reciprocity and Wage Undercutting," Research Papers in Economics 1999:13, Stockholm University, Department of Economics.
    19. Nikolaos Georgantzís & Constantine Manasakis & Evangelos Mitrokostas & Emmanuel Petrakis, 2008. "Strategic Delegation in Experimental Duopolies with Endogenous Incentive Contracts," Working Papers 0809, University of Crete, Department of Economics.
    20. Michael R. Carter & Marco Castillo, 2011. "Trustworthiness and Social Capital in South Africa: Analysis of Actual Living Standards Data and Artifactual Field Experiments," Economic Development and Cultural Change, University of Chicago Press, vol. 59(4), pages 695-722.
    21. 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.
    22. James Andreoni, 2017. "Satisfaction Guaranteed: When Moral Hazard meets Moral Preferences," NBER Working Papers 23352, National Bureau of Economic Research, Inc.
    23. Werner Güth & Matteo Ploner & Vittoria Levati, "undated". "The Effect of Group Identity in an Investment Game," Papers on Strategic Interaction 2005-06, Max Planck Institute of Economics, Strategic Interaction Group.

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