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Induced heterogeneity in trust experiments

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  • Lisa Anderson

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  • Jennifer Mellor

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  • Jeffrey Milyo

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Abstract

Several non-experimental studies claim that heterogeneity among individuals reduces trust. A few experimental studies have examined the effects of naturally-occurring differences among subjects on trusting behavior, and in contrast, most have not supported these claims. We adopt a novel approach by inducing heterogeneity among subjects in a canonical trust experiment. We accomplish this by varying the show-up payments given to subjects for participating in the experiment. We find that this induced inequality does not consistently affect first- or second-mover behavior in the classic trust game in the manner predicted by either previous theoretical work or empirical studies of survey-based measures of trust. Further, the effect of inequality on trust, in terms of both sign and significance, depends on whether show-up payments are awarded publicly or privately. Copyright Economic Science Association 2006

Suggested Citation

  • Lisa Anderson & Jennifer Mellor & Jeffrey Milyo, 2006. "Induced heterogeneity in trust experiments," Experimental Economics, Springer;Economic Science Association, vol. 9(3), pages 223-235, September.
  • Handle: RePEc:kap:expeco:v:9:y:2006:i:3:p:223-235
    DOI: 10.1007/s10683-006-9124-2
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    References listed on IDEAS

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    Cited by:

    1. Greiner, Ben & Ockenfels, Axel & Werner, Peter, 2012. "The dynamic interplay of inequality and trust—An experimental study," Journal of Economic Behavior & Organization, Elsevier, vol. 81(2), pages 355-365.
    2. Lisa Anderson & Jennifer Mellor & Jeffrey Milyo, 2010. "Did the Devil Make Them Do It? The Effects of Religion in Public Goods and Trust Games -super-," Kyklos, Wiley Blackwell, vol. 63(2), pages 163-175, May.
    3. Philipp E. Otto & Friedel Bolle, 2016. "Organizational power: Should remuneration heterogeneity mirror hierarchy?," Review of Economic Design, Springer;Society for Economic Design, vol. 20(3), pages 187-205, September.
    4. Xiao, Erte & Bicchieri, Cristina, 2010. "When equality trumps reciprocity," Journal of Economic Psychology, Elsevier, vol. 31(3), pages 456-470, June.
    5. Smith, Alexander, 2011. "Income inequality in the trust game," Economics Letters, Elsevier, vol. 111(1), pages 54-56, April.
    6. 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.
    7. Klara Zwickl & Mathias Moser, 2014. "Informal environmental regulation of industrial air pollution: Does neighborhood inequality matter?," Department of Economics Working Papers wuwp192, Vienna University of Economics and Business, Department of Economics.
    8. Bryan C. McCannon & Colleen Tokar Asaad & Mark Wilson, 2016. "Financial competence, overconfidence, and trusting investments: Results from an experiment," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 40(3), pages 590-606, July.
    9. Mccannon, Bryan C., 2014. "Trust, reciprocity, and a preference for economic freedom: experimental evidence," Journal of Institutional Economics, Cambridge University Press, vol. 10(03), pages 451-470, September.
    10. Ekici, Tufan & Ergun, Selim Jürgen & Rivas, M. Fernanda, 2016. "Trust and reciprocity in Cyprus," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 63(C), pages 36-49.
    11. Ramalingam, Abhijit & Rojo Arjona, David & Schram, Arthur & Van Leeuwen, Boris, 2015. "Authority and Centrality: Power and Cooperation in Social Dilemma Networks," IAST Working Papers 15-23, Institute for Advanced Study in Toulouse (IAST).
    12. Gabriele Camera & Cary Deck & David Porter, 2016. "Do Economic Inequalities Affect Long-Run Cooperation?," Working Papers 16-18, Chapman University, Economic Science Institute.
    13. Jordahl, Henrik, 2007. "Inequality and Trust," Working Paper Series 715, Research Institute of Industrial Economics.
    14. Lisa R. Anderson & Jennifer M. Mellor & Jeffrey Milyo, 2005. "Did the Devil Make Them Do It? The Effects of Religion in Public Goods and Trust Games," Working Papers 20, Department of Economics, College of William and Mary.
    15. Ewa Zawojska, 2014. "The role of dynamics for trust development. An experimental study," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 38.
    16. Bergh, Andreas & Bjørnskov, Christian, 2014. "Trust, welfare states and income equality: Sorting out the causality," European Journal of Political Economy, Elsevier, vol. 35(C), pages 183-199.
    17. Bergh, Andreas & Bjørnskov, Christian, 2013. "Trust, Welfare States and Income Equality: What Causes What?," Working Paper Series 994, Research Institute of Industrial Economics.
    18. Xiao, Erte & Bicchieri, Cristina, 2008. "When Equality Trumps Reciprocity: Evidence from a Laboratory Experiment," MPRA Paper 9375, University Library of Munich, Germany.
    19. 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.
    20. Shaun Hargreaves Heap & Jonathan Tan & Daniel Zizzo, 2013. "Trust, inequality and the market," Theory and Decision, Springer, vol. 74(3), pages 311-333, March.

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    Keywords

    Trust; Social capital; Inequality; Experiment;

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