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Short- and Long-run Effects of External Interventions on Trust

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  • Asanov, Igor
  • Vannuccini, Simone

Abstract

We analyze experimentally the effects of external interventions such as subsidy and targeting on investment decisions, during an intervention and after. We employ a multi-period version of the trust (investment) game Berg et al. (1995) introducing either monetary incentives for contribution or providing a suggestion about the level of investment. The results of the experiment indicate that targeting is an effective instrument to promote trustful behavior while subsidy policy is effective in neither the short- or the long-run. Therefore, we suggest a targeting policy should be considered as an instrument to foster trustful behavior.

Suggested Citation

  • Asanov, Igor & Vannuccini, Simone, 2020. "Short- and Long-run Effects of External Interventions on Trust," Review of Behavioral Economics, now publishers, vol. 7(2), pages 159-195, May.
    • Handle: RePEc:now:jnlrbe:105.00000118
    DOI: 10.1561/105.000001118
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    1. Rahul Mehrotra & Vincent Somville & Lore vandewalle, 2016. "Increasing trust in the bank to enhance savings: Experimental evidence from India," CMI Working Papers 1, CMI (Chr. Michelsen Institute), Bergen, Norway.
    2. Igor Asanov & Christoph Buehren & Panagiota Zacharodimou, 2020. "The power of experiments: How big is your n?," MAGKS Papers on Economics 202032, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

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    More about this item

    Keywords

    Trust game; Experiment; Policy; Subsidy; Academic spin-offs;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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