Trust, Reciprocity and Rules
In the absence of enforceable contracts, many economic and personal interactions rely on trust and reciprocity. Research shows that although this reliance often works well, sometimes it breaks down. Simple rules mandating minimum standards on reciprocation prevent the most egregious trust violations, but may also undermine behavior that would have otherwise produced higher overall economic welfare. We test the efficacy of exogenously imposed minimum return rules using experimental trust games. We find that rules fail to increase trust and trustworthiness. Thus low minimum standards significantly decrease economic welfare. Although sufficiently restrictive rules restore welfare, trust and trustworthy behavior never returns.
|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
References listed on IDEAS
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.:
- Andreas Fuster & Stephan Meier, 2009.
"Another hidden cost of incentives: the detrimental effect on norm enforcement,"
09-2, Federal Reserve Bank of Boston.
- Andreas Fuster & Stephan Meier, 2010. "Another Hidden Cost of Incentives: The Detrimental Effect on Norm Enforcement," Management Science, INFORMS, vol. 56(1), pages 57-70, January.
- David Dickinson & Marie-Claire Villeval, 2004.
"Does Monitoring Decrease Work Effort? The Complementarity Between Agency and Crowding-Out Theories,"
- Dickinson, David & Villeval, Marie-Claire, 2008. "Does monitoring decrease work effort?: The complementarity between agency and crowding-out theories," Games and Economic Behavior, Elsevier, vol. 63(1), pages 56-76, May.
- Marie-Claire Villeval & David Dickinson, 2004. "Does Monitoring Decrease Work Effort ? The Complementarity Between Agency and Crowding-Out Theories," Working Papers 0409, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
- David Dickinson & Marie-Claire Villeval, 2004. "Does Monitoring Decrease Work Effort ? The Complementarity Between Agency and Crowding-Out Theorie," Post-Print halshs-00180112, HAL.
- Dickinson, David L. & Villeval, Marie Claire, 2004. "Does Monitoring Decrease Work Effort? The Complementarity Between Agency and Crowding-Out Theories," IZA Discussion Papers 1222, Institute for the Study of Labor (IZA).
- David Dickinson & Marie-Claire Villeval, 2005. "Does Monitoring Decrease Work Effort? The Complementarity Between Agency and Crowding-Out Theories," Working Papers 05-12, Department of Economics, Appalachian State University.
- Armin Falk & Michael Kosfeld, .
"The Hidden Costs of Control,"
IEW - Working Papers
250, Institute for Empirical Research in Economics - University of Zurich.
- Berg Joyce & Dickhaut John & McCabe Kevin, 1995. "Trust, Reciprocity, and Social History," Games and Economic Behavior, Elsevier, vol. 10(1), pages 122-142, July.
- Tyran, Jean-Robert, 2003. "Behavioral Game Theory. Experiments in Strategic Interaction: Colin F. Camerer, Princeton University Press, Princeton, New Jersey, 2003, p. 550, Price $65.00/[UK pound]42.95, ISBN 0-691-09039-4," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 32(6), pages 717-720, December.
- Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
- Carl Mellström & Magnus Johannesson, 2008.
"Crowding Out in Blood Donation: Was Titmuss Right?,"
Journal of the European Economic Association,
MIT Press, vol. 6(4), pages 845-863, 06.
- Mellström, Carl & Johannesson, Magnus, 2005. "Crowding Out in Blood Donation: Was Titmuss Right?," Working Papers in Economics 180, University of Gothenburg, Department of Economics, revised 08 Feb 2008.
When requesting a correction, please mention this item's handle: RePEc:chu:wpaper:11-06. 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.