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Trust Building Among Strangers

Author

Listed:
  • Teck-Hua Ho

    () (Haas School of Business, University of California, Berkeley, California 94720)

  • Keith Weigelt

    () (The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104)

Abstract

The trust-building process is basic to social science. We investigate it in a laboratory setting using a novel multistage trust game where social gains are achieved if players trust each other in each stage. In each stage, also, players have an opportunity to appropriate these gains or be trustworthy by sharing them. Players are strangers because they do not know the identity of others and they will not play them again. Thus, there is no prospect of future interaction to induce trusting behavior, and we study the trust-building process where there is little scope for social relations and networks. Standard game theory, which assumes all players are opportunistic and untrustworthy and thus should have zero trust for others, is used to construct a null hypothesis. We test whether people are trusting or trustworthy and examine how inferring the intentions of those who trust affects trustworthiness. We also investigate the effect of stake on trust, and study the evolution of trust. Results show subjects exhibit some degree of trusting behavior, although a majority of them are not trustworthy and claim the entire social gain. Players are more reluctant to trust in later stages than in earlier ones and are more trustworthy if they are certain of the trustee's intention. Surprisingly, subjects are more trusting and trustworthy when the stake size increases. Finally, we find the subpopulation that invests in initiating the trust-building process modifies its trusting behavior based on the relative fitness of trust.

Suggested Citation

  • Teck-Hua Ho & Keith Weigelt, 2005. "Trust Building Among Strangers," Management Science, INFORMS, vol. 51(4), pages 519-530, April.
  • Handle: RePEc:inm:ormnsc:v:51:y:2005:i:4:p:519-530
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    File URL: http://dx.doi.org/10.1287/mnsc.1040.0350
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    References listed on IDEAS

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    1. 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.
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    Citations

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    Cited by:

    1. Aradhna Krishna & M. Utku Ünver, 2008. "Research Note—Improving the Efficiency of Course Bidding at Business Schools: Field and Laboratory Studies," Marketing Science, INFORMS, vol. 27(2), pages 262-282, 03-04.
    2. Cox, James C. & Kerschbamer, Rudolf & Neururer, Daniel, 2016. "What is trustworthiness and what drives it?," Games and Economic Behavior, Elsevier, vol. 98(C), pages 197-218.
    3. René Fahr & Bernd Irlenbusch, 2008. "Identifying personality traits to enhance trust between organisations: an experimental approach," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 29(6), pages 469-487.
    4. Erica Mina Okada, 2010. "Uncertainty, Risk Aversion, and WTA vs. WTP," Marketing Science, INFORMS, vol. 29(1), pages 75-84, 01-02.
    5. Roman M. Sheremeta & Matthew W. McCarter, 2013. "You Can’t Put Old Wine in New Bottles: The Effect of Newcomers on Coordination in Groups," Working Papers 13-02, Chapman University, Economic Science Institute.
    6. Mark Mortensen & Tsedal B. Neeley, 2012. "Reflected Knowledge and Trust in Global Collaboration," Management Science, INFORMS, vol. 58(12), pages 2207-2224, December.
    7. repec:eee:jeborg:v:142:y:2017:i:c:p:320-330 is not listed on IDEAS
    8. Emin Karagözoğlu & Ümit Barış Urhan, 2017. "The Effect of Stake Size in Experimental Bargaining and Distribution Games: A Survey," Group Decision and Negotiation, Springer, vol. 26(2), pages 285-325, March.
    9. 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.
    10. Egbert, Henrik, 2017. "The Gift and the Centipede," MPRA Paper 80324, University Library of Munich, Germany.
    11. Özalp Özer & Yanchong Zheng & Kay-Yut Chen, 2011. "Trust in Forecast Information Sharing," Management Science, INFORMS, vol. 57(6), pages 1111-1137, June.

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