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Do Negative Random Shocks Affect Trust and Trustworthiness?

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  • Hernán Bejarano
  • Joris Gillet
  • Ismael Rodriguez‐Lara

Abstract

We report data from a variation of the trust game aimed at determining whether (and how) inequality and random shocks that affect wealth influence the levels of trust and trustworthiness. To tease apart the effect of the shock and the inequality, we compare behavior in a trust game where the inequality is initially given and one where it is the result of a random shock that reduces the second mover's endowment. We find that first‐movers send less to second‐movers but only when the inequality results from a random shock. As for the amount returned, second‐movers return less when they are endowed less than first‐movers, regardless of whether the difference in endowments was initially given or occurred after a random shock.

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  • 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.
  • Handle: RePEc:wly:soecon:v:85:y:2018:i:2:p:563-579
    DOI: 10.1002/soej.12302
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