Transparency, Efficiency and the Distribution of Economic Welfare in Pass-Through Investment Trust Games
We design an experiment to examine welfare and behavior in a multi-level trust game representing a pass through investment in an intermediated market. In a repeated game, an Investor invests via an Intermediary who lends to a Borrower. A pre-experiment one-shot version of the game serves as a baseline and to type each subject. We alter the transparency of exchanges between non-adjacent parties. We find transparency of the exchanges between the investor and intermediary does not significantly affect welfare. However, transparency regarding exchanges between the intermediary and borrower promotes trust on the part of the investor, increasing welfare. Further, this has asymmetric effects: borrowers and intermediaries achieve greater welfare benefits than investors. We discuss implications for what specific aspects of financial market transparency may facilitate more efficiency.
|Date of creation:||2011|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (714) 628-2830
Fax: (714) 628-2881
Web page: http://www.chapman.edu/esi/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Noussair, Charles & Porter, David., 1990.
"Allocating Priority with Auctions: An Experimental Analysis,"
747, California Institute of Technology, Division of the Humanities and Social Sciences.
- Noussair, Charles & Porter, David, 1992. "Allocating priority with auctions: An experimental analysis," Journal of Economic Behavior & Organization, Elsevier, vol. 19(2), pages 169-195, October.
- Roman M. Sheremeta, 2010.
"Expenditures and Information Disclosure in Two-Stage Political Contests,"
Journal of Conflict Resolution,
Peace Science Society (International), vol. 54(5), pages 771-798, October.
- Roman M. Sheremeta, 2009. "Expenditures and Information Disclosure in Two- Stage Political Contests," Working Papers 09-10, Chapman University, Economic Science Institute.
- Sheremeta, Roman, 2009. "Expenditures and Information Disclosure in Two-Stage Political Contests," MPRA Paper 49887, University Library of Munich, Germany.
- Roman M. Sheremeta & Jingjing Zhang, 2014.
"Three-Player Trust Game With Insider Communication,"
Western Economic Association International, vol. 52(2), pages 576-591, 04.
- Sheremeta, Roman & Zhang, Jingjing, 2013. "Three-Player Trust Game with Insider Communication," MPRA Paper 43533, University Library of Munich, Germany.
- Roman M. Sheremeta & Jingjing Zhang, 2013. "Three-Player Trust Game with Insider Communication," Working Papers 13-03, Chapman University, Economic Science Institute.
- Rigdon, Mary & McCabe, Kevin & Smith, Vernon, 2001.
"Sustaining cooperation in trust games,"
2006, University Library of Munich, Germany, revised 23 Apr 2006.
- Berg Joyce & Dickhaut John & McCabe Kevin, 1995. "Trust, Reciprocity, and Social History," Games and Economic Behavior, Elsevier, vol. 10(1), pages 122-142, July.
- Ben Greiner & Maria Vittoria Levati, 2003.
"Indirect Reciprocity in Cyclical Networks - An Experimental Study -,"
Papers on Strategic Interaction
2003-15, Max Planck Institute of Economics, Strategic Interaction Group.
- Greiner, Ben & Vittoria Levati, M., 2005. "Indirect reciprocity in cyclical networks: An experimental study," Journal of Economic Psychology, Elsevier, vol. 26(5), pages 711-731, October.
- Güth, Werner & Königstein, Manfred & Marchand, Nadège & Nehring, Klaus, 2000.
"Trust and reciprocity in the investment game with indirect reward,"
SFB 373 Discussion Papers
2000,110, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
- Werner Güth & Manfred Königstein & Nadège Marchand & Klaus Nehring, 2001. "Trust and Reciprocity in the Investment Game with Indirect Reward," Homo Oeconomicus, Institute of SocioEconomics, vol. 18, pages 241-262.
- Mago, Shakun & Samak, Anya & Sheremeta, Roman, 2013.
"Facing Your Opponents: Social Identification and Information Feedback in Contests,"
47029, University Library of Munich, Germany.
- Shakun D. Mago & Anya C. Savikhin & Roman M. Sheremeta, 2012. "Facing Your Opponents: Social identification and information feedback in contests," Working Papers 12-15, Chapman University, Economic Science Institute.
- Burnham, Terence & McCabe, Kevin & Smith, Vernon L., 2000. "Friend-or-foe intentionality priming in an extensive form trust game," Journal of Economic Behavior & Organization, Elsevier, vol. 43(1), pages 57-73, September.
- repec:ner:tilbur:urn:nbn:nl:ui:12-381124 is not listed on IDEAS
- Fama, Eugene F & MacBeth, James D, 1973. "Risk, Return, and Equilibrium: Empirical Tests," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 607-36, May-June.
- Buchner, Susanne & Gonzalez, Luis G. & Guth, Werner & Levati, M. Vittoria, 2004.
"Incentive contracts versus trust in three-person ultimatum games: an experimental study,"
European Journal of Political Economy,
Elsevier, vol. 20(3), pages 673-694, September.
- Susanne Büchner & Luis Gonzalez & Werner Güth & M. Vittoria Levati, . "Incentive Contracts versus Trust in Three-Person Ultimatum Games - An Experimental Study," Papers on Strategic Interaction 2002-20, Max Planck Institute of Economics, Strategic Interaction Group.
- Cason, Timothy N. & Plott, Charles R., 2004.
"Forced information disclosure and the fallacy of transparency in markets,"
1202, California Institute of Technology, Division of the Humanities and Social Sciences.
- Timothy N. Cason & Charles R. Plott, 2005. "Forced Information Disclosure and the Fallacy of Transparency in Markets," Economic Inquiry, Western Economic Association International, vol. 43(4), pages 699-714, October.
- Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
- Rapoport, Amnon & Stein, William E. & Parco, James E. & Nicholas, Thomas E., 2003. "Equilibrium play and adaptive learning in a three-person centipede game," Games and Economic Behavior, Elsevier, vol. 43(2), pages 239-265, May.
- Seinen, Ingrid & Schram, Arthur, 2006. "Social status and group norms: Indirect reciprocity in a repeated helping experiment," European Economic Review, Elsevier, vol. 50(3), pages 581-602, April.
When requesting a correction, please mention this item's handle: RePEc:chu:wpaper:11-03. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Megan Luetje)
If references are entirely missing, you can add them using this form.