IDEAS home Printed from https://ideas.repec.org/a/eee/soceco/v40y2011i1p1-13.html
   My bibliography  Save this article

Lavish returns on cheap talk: Two-way communication in trust games

Author

Listed:
  • Ben-Ner, Avner
  • Putterman, Louis
  • Ren, Ting

Abstract

We conduct trust game experiments in which subjects can sometimes exchange proposals either in numerical (tabular) form, or using chat messages followed by exchange of numerical proposals. Numerical communication significantly increases trusting and trustworthiness; inclusion of 1-min verbal communication in a chat room generates an even larger and more robust effect. On average, trustors send $9.21 of their $10 endowment as compared to $7.66 in the standard trust game, and trustees return 56% vs. 45%. Chat enhances the likelihood that trustors and trustees will adhere to non-binding agreements they make--an additional interpretation of trusting and trustworthiness--and increases the probability that subjects will propose, accept, and abide by equal-division agreements. Analysis of the content of subjects' verbal communication shows that what is said, and not only the fact that things are said, significantly affects outcomes.

Suggested Citation

  • Ben-Ner, Avner & Putterman, Louis & Ren, Ting, 2011. "Lavish returns on cheap talk: Two-way communication in trust games," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(1), pages 1-13, February.
  • Handle: RePEc:eee:soceco:v:40:y:2011:i:1:p:1-13
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/B6W5H-511R9MT-2/2/454aae49c9f1dd211307c60e8a4de96b
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ernst Fehr & Simon Gächter, 2000. "Fairness and Retaliation: The Economics of Reciprocity," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 159-181, Summer.
    2. Hoffman, Elizabeth & McCabe, Kevin A & Smith, Vernon L, 1998. "Behavioral Foundations of Reciprocity: Experimental Economics and Evolutionary Psychology," Economic Inquiry, Western Economic Association International, vol. 36(3), pages 335-352, July.
    3. Kreps, David M. & Milgrom, Paul & Roberts, John & Wilson, Robert, 1982. "Rational cooperation in the finitely repeated prisoners' dilemma," Journal of Economic Theory, Elsevier, vol. 27(2), pages 245-252, August.
    4. Falk, Armin & Fischbacher, Urs, 2006. "A theory of reciprocity," Games and Economic Behavior, Elsevier, vol. 54(2), pages 293-315, February.
    5. Servátka, Maroš & Tucker, Steven & Vadovič, Radovan, 2011. "Words speak louder than money," Journal of Economic Psychology, Elsevier, vol. 32(5), pages 700-709.
    6. Uri Gneezy, 2005. "Deception: The Role of Consequences," American Economic Review, American Economic Association, vol. 95(1), pages 384-394, March.
    7. Fischbacher, Urs & Gachter, Simon & Fehr, Ernst, 2001. "Are people conditionally cooperative? Evidence from a public goods experiment," Economics Letters, Elsevier, vol. 71(3), pages 397-404, June.
    8. Sanchez-Pages, Santiago & Vorsatz, Marc, 2007. "An experimental study of truth-telling in a sender-receiver game," Games and Economic Behavior, Elsevier, vol. 61(1), pages 86-112, October.
    9. Cox, James C., 2004. "How to identify trust and reciprocity," Games and Economic Behavior, Elsevier, vol. 46(2), pages 260-281, February.
    10. Cox, James C. & Friedman, Daniel & Gjerstad, Steven, 2007. "A tractable model of reciprocity and fairness," Games and Economic Behavior, Elsevier, vol. 59(1), pages 17-45, April.
    11. Gunnthorsdottir, Anna & McCabe, Kevin & Smith, Vernon, 2002. "Using the Machiavellianism instrument to predict trustworthiness in a bargaining game," Journal of Economic Psychology, Elsevier, vol. 23(1), pages 49-66, February.
    12. Bohnet, Iris & Zeckhauser, Richard, 2004. "Trust, risk and betrayal," Journal of Economic Behavior & Organization, Elsevier, vol. 55(4), pages 467-484, December.
    13. Ernst Fehr & Bettina Rockenbach, 2003. "Detrimental effects of sanctions on human altruism," Nature, Nature, vol. 422(6928), pages 137-140, March.
    14. Ernst Fehr & John A. List, 2004. "The Hidden Costs and Returns of Incentives-Trust and Trustworthiness Among CEOs," Journal of the European Economic Association, MIT Press, vol. 2(5), pages 743-771, September.
    15. Harvey James, 2002. "The Trust Paradox: A Survey of Economic Inquiries Into the Nature of Trust and Trustworthiness," Microeconomics 0202001, University Library of Munich, Germany.
    16. Houser, Daniel & Xiao, Erte & McCabe, Kevin & Smith, Vernon, 2008. "When punishment fails: Research on sanctions, intentions and non-cooperation," Games and Economic Behavior, Elsevier, vol. 62(2), pages 509-532, March.
    17. Edward L. Glaeser & David I. Laibson & José A. Scheinkman & Christine L. Soutter, 2000. "Measuring Trust," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 811-846.
      • Glaeser, Edward Ludwig & Laibson, David I. & Scheinkman, Jose A. & Soutter, Christine L., 2000. "Measuring Trust," Scholarly Articles 4481497, Harvard University Department of Economics.
    18. Buchan, Nancy R. & Johnson, Eric J. & Croson, Rachel T.A., 2006. "Let's get personal: An international examination of the influence of communication, culture and social distance on other regarding preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 60(3), pages 373-398, July.
    19. Willinger, Marc & Keser, Claudia & Lohmann, Christopher & Usunier, Jean-Claude, 2003. "A comparison of trust and reciprocity between France and Germany: Experimental investigation based on the investment game," Journal of Economic Psychology, Elsevier, vol. 24(4), pages 447-466, August.
    20. James Jr., Harvey S., 2002. "The trust paradox: a survey of economic inquiries into the nature of trust and trustworthiness," Journal of Economic Behavior & Organization, Elsevier, vol. 47(3), pages 291-307, March.
    21. Catherine Eckel & Rick Wilson, 2006. "Internet cautions: Experimental games with internet partners," Experimental Economics, Springer;Economic Science Association, vol. 9(1), pages 53-66, April.
    22. Ben-Ner, Avner & Putterman, Louis, 2009. "Trust, communication and contracts: An experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 70(1-2), pages 106-121, May.
    23. Rigdon, Mary, 2009. "Trust and reciprocity in incentive contracting," Journal of Economic Behavior & Organization, Elsevier, vol. 70(1-2), pages 93-105, May.
    24. Joseph Farrell & Matthew Rabin, 1996. "Cheap Talk," Journal of Economic Perspectives, American Economic Association, vol. 10(3), pages 103-118, Summer.
    25. Ben-Ner, Avner & Halldorsson, Freyr, 2010. "Trusting and trustworthiness: What are they, how to measure them, and what affects them," Journal of Economic Psychology, Elsevier, vol. 31(1), pages 64-79, February.
    26. Talbot Page & Louis Putterman & Bulent Unel, 2005. "Voluntary Association in Public Goods Experiments: Reciprocity, Mimicry and Efficiency," Economic Journal, Royal Economic Society, vol. 115(506), pages 1032-1053, October.
    27. Andreas Ortmann & John Fitzgerald & Carl Boeing, 2000. "Trust, Reciprocity, and Social History: A Re-examination," Experimental Economics, Springer;Economic Science Association, vol. 3(1), pages 81-100, June.
    28. Michihiro Kandori, 1992. "Social Norms and Community Enforcement," Review of Economic Studies, Oxford University Press, vol. 59(1), pages 63-80.
    29. Eckel, Catherine C. & Wilson, Rick K., 2004. "Is trust a risky decision?," Journal of Economic Behavior & Organization, Elsevier, vol. 55(4), pages 447-465, December.
    30. Andreoni,J., 2005. "Trust, reciprocity, and contract enforcement : experiments on satisfaction guaranteed," Working papers 7, Wisconsin Madison - Social Systems.
    31. Berg Joyce & Dickhaut John & McCabe Kevin, 1995. "Trust, Reciprocity, and Social History," Games and Economic Behavior, Elsevier, vol. 10(1), pages 122-142, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ben-Ner, Avner & Putterman, Louis, 2009. "Trust, communication and contracts: An experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 70(1-2), pages 106-121, May.
    2. Ashraf, Nava & Bohnet, Iris & Piankov, Nikita, 2003. "Is Trust a Bad Investment?," Working Paper Series rwp03-047, Harvard University, John F. Kennedy School of Government.
    3. Calabuig, Vicente & Fatas, Enrique & Olcina, Gonzalo & Rodriguez-Lara, Ismael, 2016. "Carry a big stick, or no stick at all," Journal of Economic Psychology, Elsevier, vol. 57(C), pages 153-171.
    4. Rigdon, Mary, 2009. "Trust and reciprocity in incentive contracting," Journal of Economic Behavior & Organization, Elsevier, vol. 70(1-2), pages 93-105, May.
    5. 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.
    6. Kim, Jeongbin & Putterman, Louis & Zhang, Xinyi, 2022. "Trust, Beliefs and Cooperation: Excavating a Foundation of Strong Economies," European Economic Review, Elsevier, vol. 147(C).
    7. Maroš Servátka & Steven Tucker & Radovan Vadovič, 2011. "Building Trust—One Gift at a Time," Games, MDPI, vol. 2(4), pages 1-22, September.
    8. Johansson-Stenman, Olof & Mahmud, Minhaj & Martinsson, Peter, 2013. "Trust, trust games and stated trust: Evidence from rural Bangladesh," Journal of Economic Behavior & Organization, Elsevier, vol. 95(C), pages 286-298.
    9. Brülhart, Marius & Usunier, Jean-Claude, 2004. "Verified Trust: Reciprocity, Altruism and Noise in Trust Games," CEPR Discussion Papers 4758, C.E.P.R. Discussion Papers.
    10. Kanagaretnam, Kiridaran & Mestelman, Stuart & Khalid Nainar, S.M. & Shehata, Mohamed, 2012. "The impact of empowering investors on trust and trustworthiness," Journal of Economic Psychology, Elsevier, vol. 33(3), pages 566-577.
    11. Goeschl, Timo & Jarke, Johannes, 2014. "Trust, but verify? When trustworthiness is observable only through (costly) monitoring," WiSo-HH Working Paper Series 20, University of Hamburg, Faculty of Business, Economics and Social Sciences, WISO Research Laboratory.
    12. Uwe Jirjahn & Vanessa Lange, 2015. "Reciprocity and Workers’ Tastes for Representation," Journal of Labor Research, Springer, vol. 36(2), pages 188-209, June.
    13. Martin G. Kocher, 2015. "How Trust in Social Dilemmas Evolves with Age," CESifo Working Paper Series 5447, CESifo.
    14. Lei, Vivian & Masclet, David & Vesely, Filip, 2014. "Competition vs. communication: An experimental study on restoring trust," Journal of Economic Behavior & Organization, Elsevier, vol. 108(C), pages 94-107.
    15. Sutter, Matthias & Kocher, Martin G., 2007. "Trust and trustworthiness across different age groups," Games and Economic Behavior, Elsevier, vol. 59(2), pages 364-382, May.
    16. Ciriolo, Emanuele, 2007. "Inequity aversion and trustees' reciprocity in the trust game," European Journal of Political Economy, Elsevier, vol. 23(4), pages 1007-1024, December.
    17. López-Pérez, Raúl, 2009. "The Power of Words: Why Communication fosters Cooperation and Efficiency," Working Papers in Economic Theory 2009/01, Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History).
    18. Stephen Atlas & Louis Putterman, 2011. "Trust among the Avatars: A Virtual World Experiment, with and without Textual and Visual Cues," Southern Economic Journal, John Wiley & Sons, vol. 78(1), pages 63-86, July.
    19. James Andreoni, 2018. "Satisfaction Guaranteed: When Moral Hazard Meets Moral Preferences," American Economic Journal: Microeconomics, American Economic Association, vol. 10(4), pages 159-189, November.
    20. Rodriguez-lara, Ismael, 2015. "Equal distribution or equal payoffs? Reciprocity and inequality aversion in the investment game," MPRA Paper 63313, University Library of Munich, Germany.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:soceco:v:40:y:2011:i:1:p:1-13. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.elsevier.com/locate/inca/620175 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620175 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.