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Trust, inequality and the market

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  • Shaun Hargreaves Heap
  • Jonathan Tan
  • Daniel Zizzo

Abstract

This article examines, experimentally, whether inequality affects the social capital of trust in non-market and market settings. We consider three experimental treatments, one with equality, one with inequality but no knowledge of the income of other agents, and one with inequality and knowledge. Inequality, particularly when it is known, has a corrosive effect on trusting behaviours in this experiment. Agents appear to be less sensitive to known relative income differentials in markets than they are in the non-market settings, but trust in markets appears generally more vulnerable to the introduction of inequality than in the non-market setting. Copyright Springer Science+Business Media, LLC. 2013

Suggested Citation

  • Shaun Hargreaves Heap & Jonathan Tan & Daniel Zizzo, 2013. "Trust, inequality and the market," Theory and Decision, Springer, vol. 74(3), pages 311-333, March.
    • Handle: RePEc:kap:theord:v:74:y:2013:i:3:p:311-333
    DOI: 10.1007/s11238-011-9287-y
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    Citations

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    Cited by:

    1. Fehr, Dietmar & Rau, Hannes & Trautmann, Stefan T. & Xu, Yilong, 2020. "Inequality, fairness and social capital," European Economic Review, Elsevier, vol. 129(C).
    2. Shaun P. Hargreaves Heap, 2021. "A community of advantage or mutual respect?," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 68(1), pages 41-49, March.
    3. Hernán Bejarano & Joris Gillet & Ismael Rodriguez‐Lara, 2018. "Do Negative Random Shocks Affect Trust and Trustworthiness?," Southern Economic Journal, John Wiley & Sons, vol. 85(2), pages 563-579, October.
    4. Bejarano, Hernán & Gillet, Joris & Rodriguez-Lara, Ismael, 2021. "Trust and trustworthiness after negative random shocks," Journal of Economic Psychology, Elsevier, vol. 86(C).
    5. Shaun Hargreaves Heap, 2011. "The magic of the market," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 58(1), pages 105-115, March.
    6. Ismael Rodriguez-Lara, 2018. "No evidence of inequality aversion in the investment game," PLOS ONE, Public Library of Science, vol. 13(10), pages 1-16, October.
    7. Bejarano, Hernan & Gillet, Joris & Lara, Ismael Rodríguez, 2021. "When the rich do (not) trust the (newly) rich: Experimental evidence on the effects of positive random shocks in the trust game," OSF Preprints wmejt, Center for Open Science.
    8. Francisco B. Galarza, 2017. "Trust and Trustworthiness in College: An Experimental Analysis," Working Papers 17-03, Centro de Investigación, Universidad del Pacífico.
    9. Sabater-Grande, Gerardo & García-Gallego, Aurora & Georgantzís, Nikolaos & Herranz-Zarzoso, Noemí, 2022. "The effects of personality, risk and other-regarding attitudes on trust and reciprocity," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 96(C).
    10. Shaun P. Hargreaves Heap & Eugenio Levi & Abhijiit Ramalingam, 2020. "Crowding-out the in-group bias: a nationalist policy paradox?," Working Papers 20-14, Department of Economics, Appalachian State University.
    11. Hernan Bejarano & Joris Gillet & Ismael Rodriguez-Lara, 2020. "Trust and Trustworthiness After Negative Random Shocks," Working Papers 20-25, Chapman University, Economic Science Institute.
    12. Masaki Aoyagi & Naoko Nishimura & Yoshitaka Okano, 2017. "Efficiency and Voluntary Redistribution under Inequality," ISER Discussion Paper 0992, Institute of Social and Economic Research, Osaka University.

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    More about this item

    Keywords

    Trust; Income inequality; Market; Social capital; C72; C91; Z13;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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