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An Experimental Investigation of Trust and Sequential Trade

Author

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  • 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;)

Abstract

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.

Suggested Citation

  • Cary A. Deck, 2010. "An Experimental Investigation of Trust and Sequential Trade," Southern Economic Journal, Southern Economic Association, vol. 76(4), pages 993-1004, April.
  • Handle: RePEc:sej:ancoec:v:76:4:y:2010:p:993-1004
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    File URL: http://dx.doi.org/10.4284/sej.2010.76.4.993
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    Citations

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    Cited by:

    1. Cary Deck & Maroš Servátka & Steven Tucker, 2013. "An examination of the effect of messages on cooperation under double-blind and single-blind payoff procedures," Experimental Economics, Springer;Economic Science Association, vol. 16(4), pages 597-607, December.
    2. Maroš Servátka & Steven Tucker & Radovan Vadovič, 2011. "Building Trust—One Gift at a Time," Games, MDPI, Open Access Journal, vol. 2(4), pages 1-22, September.
    3. Bryan C. McCannon & Colleen Tokar Asaad & Mark Wilson, 2015. "Contracts and Trust," Working Papers 15-15, Department of Economics, West Virginia University.

    More about this item

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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