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Auctioning the Right to Trust and Reciprocate: Scarcity, Market Allocation, and Selection in the Trust Game

Author

Listed:
  • Jason Shachat

    (Center for Intelligence Economic Science, Southwestern University of Finance and Economics and Chapman University)

  • J. Todd Swarthout

    (Department of Economics, Georgia State University)

  • Yun Wang

    (School of Economics, Renmin University of China)

Abstract

We examine how competitive allocation of scarce participation rights shapes behavior in a Berg-style trust game. Trustor and trustee roles are allocated through multi-unit uniform-price English auctions with varying scarcity, alongside a matched-fee random-assignment control treatment. Positive transfers and returns persist, but behavior lies near the low-trust, low-reciprocity end of comparable benchmarks. Tighter scarcity accelerates the decline in trustor transfers, while trustee returns show no monotonic pattern. Scarcity strongly raises auction prices without comparably raising participants’ gross trust-game earnings, thereby lowering net earnings. Exit bids adjust to past game profitability, indicating adaptive learning about the value of participation.

Suggested Citation

  • Jason Shachat & J. Todd Swarthout & Yun Wang, 2026. "Auctioning the Right to Trust and Reciprocate: Scarcity, Market Allocation, and Selection in the Trust Game," Working Papers 26-12, Chapman University, Economic Science Institute.
    • Handle: RePEc:chu:wpaper:26-12
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    File URL: https://digitalcommons.chapman.edu/esi_working_papers/443/
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    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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