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Building Trust—One Gift at a Time

  • Maroš Servátka

    ()

    (New Zealand Experimental Economics Laboratory, Department of Economics and Finance, University of Canterbury, Private Bag, Christchurch 4800, New Zealand)

  • Steven Tucker

    ()

    (New Zealand Experimental Economics Laboratory, Department of Economics and Finance, University of Canterbury, Private Bag, Christchurch 4800, New Zealand)

  • Radovan Vadovič

    ()

    (Centro de Investigación Económica, Instituto Tecnológico Autónomo de México, Mexico City 10700, Mexico)

This paper reports an experiment evaluating the effect of gift giving on building trust. We have nested our explorations in the standard version of the investment game. Our gift treatment includes a dictator stage in which the trustee decides whether to give a gift to the trustor before both of them proceed to play the investment game. We observe that in such case the majority of trustees offer their endowment to trustors. Consequently, receiving a gift significantly increases the amounts sent by trustors when controlling for the differences in payoffs created by it. Trustees are, however, not better off by giving a gift as the increase in the amount sent by trustors is not large enough to offset the trustees’ loss associated with the cost of giving a gift.

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Article provided by MDPI, Open Access Journal in its journal Games.

Volume (Year): 2 (2011)
Issue (Month): 4 (September)
Pages: 412-433

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Handle: RePEc:gam:jgames:v:2:y:2011:i:4:p:412-433:d:14167
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