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An Experimental Investigation of Trust and Sequential Trade

  • Cary A. Deck


    (Department of Economics, Walton College of Business, University of Arkansas and Economic Science Institute, Chapman University, 402 WCOB, 1 University of Arkansas, Fayetteville, AR 72701, USA;)

The trust game has been widely studied in the laboratory and is often presented as a model of exchange with incomplete contracting. The standard presentation of the game differs in three potentially important ways from the naturally occurring transactions it represents: buyer-seller framing, payoff privacy, and price setting. Two sets of experiments look at the combined effect of these three features while varying the order of moves, an aspect of the problem that previous research has found significantly affects the likelihood of a successful trade. In both cases high levels of trust and low levels of trustworthiness are observed. Further experimental investigation suggests that the framing effect generates the increased trust but that payoff privacy reduces trustworthiness.

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Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 76 (2010)
Issue (Month): 4 (April)
Pages: 993-1004

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Handle: RePEc:sej:ancoec:v:76:4:y:2010:p:993-1004
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