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Words Speak Louder Than Money

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Abstract

Should one use words or money to foster trust of the other party if no means of enforcing trustworthiness are available? This paper reports an experiment studying the effectiveness of two types of mechanisms for promoting trust: a costly gift and a costless message as well as their mutual interaction. We nest our findings in the standard version of the investment game. Our data provide evidence that while both stand-alone mechanisms enhance trust, and a gift performs significantly worse than a message. Moreover, when a gift is combined with sending a message, it can be counterproductive.

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  • Maroš Servátka & Steven Tucker & Radovan Vadovič, 2011. "Words Speak Louder Than Money," Working Papers in Economics 11/13, University of Canterbury, Department of Economics and Finance.
  • Handle: RePEc:cbt:econwp:11/13
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Talk, trust & inequality
      by chris dillow in Stumbling and Mumbling on 2011-04-27 16:30:45

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    Cited by:

    1. Ben-Ner, Avner & Putterman, Louis & Ren, Ting, 2011. "Lavish returns on cheap talk: Two-way communication in trust games," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(1), pages 1-13, February.
    2. 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.
    3. Dufwenberg, Martin & Servátka, Maroš & Vadovič, Radovan, 2017. "Honesty and informal agreements," Games and Economic Behavior, Elsevier, vol. 102(C), pages 269-285.
    4. Zakaria Babutsidze & Nobuyuki Hanaki & Adam Zylbersztejn, 2021. "Nonverbal content and trust: An experiment on digital communication," Economic Inquiry, Western Economic Association International, vol. 59(4), pages 1517-1532, October.
    5. Adam Zylbersztejn & Zakaria Babutsidze & Nobuyuki Hanaki, 2021. "Predicting Trustworthiness Across Cultures: An Experiment," Post-Print halshs-03896269, HAL.
    6. Zakaria Babutsidze & Nobuyuki Hanaki & Adam Zylbersztejn, 2019. "Digital Communication and Swift Trust," Post-Print halshs-02409314, HAL.
    7. Lei, Vivian & Masclet, David & Vesely, Filip, 2014. "Competition vs. communication: An experimental study on restoring trust," Journal of Economic Behavior & Organization, Elsevier, vol. 108(C), pages 94-107.
    8. James Cox & Maroš Servátka & Radovan Vadovič, 2010. "Saliency of outside options in the lost wallet game," Experimental Economics, Springer;Economic Science Association, vol. 13(1), pages 66-74, March.
    9. Rong, Rong & Barton, Jared, 2021. "I’ll be there: Promises in the field," Organizational Behavior and Human Decision Processes, Elsevier, vol. 166(C), pages 20-26.
    10. Zakaria Babutsidze & Nobuyuki Hanaki & Adam Zylbersztejn, 2020. "Nonverbal content and swift trust: An experiment on digital communication," Working Papers halshs-02483343, HAL.
    11. Khalmetski, Kiryl, 2016. "Testing guilt aversion with an exogenous shift in beliefs," Games and Economic Behavior, Elsevier, vol. 97(C), pages 110-119.
    12. Richter, Andries & van Soest, Daan & Grasman, Johan, 2013. "Contagious cooperation, temptation, and ecosystem collapse," Journal of Environmental Economics and Management, Elsevier, vol. 66(1), pages 141-158.
    13. Barton, Jared & Rodet, Cortney, 2015. "Are political statements only expressive? An experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 116(C), pages 174-186.
    14. repec:cup:judgdm:v:17:y:2022:i:5:p:1123-1145 is not listed on IDEAS
    15. Maroš Servátka & Steven Tucker & Radovan Vadovič, 2011. "Building Trust—One Gift at a Time," Games, MDPI, vol. 2(4), pages 1-22, September.
    16. Antinyan, Armenak & Corazzini, Luca & D'Agostino, Elena & Pavesi, Filippo, 2023. "Watch your words: An experimental study on communication and the opportunity cost of delegation," Journal of Economic Behavior & Organization, Elsevier, vol. 214(C), pages 216-232.
    17. Martin Dufwenberg & Maroš Servátka & Radovan Vadovič, 2012. "ABC on Deals," Working Papers in Economics 12/14, University of Canterbury, Department of Economics and Finance.
    18. repec:jdm:journl:v:17:y:2022:i:5:p:1123-1145 is not listed on IDEAS

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    More about this item

    Keywords

    Communication; content analysis; experimental economics; gift giving; investment game; message; trust; trustworthiness;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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