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The Psychological Game of Trust


  • Martin Dufwenberg
  • Werner Gueth



Two traditional assumptions in neo-classical economics have been material self-interest and (commonly known) decision rationality. Since there is ample contradictory empirical evidence, many recent attempts have been made to remodel the situation so that rational behavior is more in line with actual results (game fitting). Here we concentrate on intrinsic let-down aversion whose strength can depend on the relative frequency of such concerns, i.e. on a sociological aspect, and examine how these ideas apply to a game of trust. We discuss whether the flexibility of the approach is a virtue or a vice.

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  • Martin Dufwenberg & Werner Gueth, 2001. "The Psychological Game of Trust," Papers on Strategic Interaction 2004-19, Max Planck Institute of Economics, Strategic Interaction Group.
  • Handle: RePEc:esi:discus:2004-19

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    References listed on IDEAS

    1. John C. Harsanyi & Reinhard Selten, 1988. "A General Theory of Equilibrium Selection in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582384, January.
    2. Charness, Gary & Dufwenberg, Martin, 2003. "Promises & Partnership," Research Papers in Economics 2003:3, Stockholm University, Department of Economics.
    3. Bolton, Gary E, 1991. "A Comparative Model of Bargaining: Theory and Evidence," American Economic Review, American Economic Association, vol. 81(5), pages 1096-1136, December.
    4. Ernst Fehr & Klaus M. Schmidt, "undated". "Theories of Fairness and Reciprocity - Evidence and Economic Applications," IEW - Working Papers 075, Institute for Empirical Research in Economics - University of Zurich.
    5. Guth, Werner, 1995. "An Evolutionary Approach to Explaining Cooperative Behavior by Reciprocal Incentives," International Journal of Game Theory, Springer;Game Theory Society, vol. 24(4), pages 323-344.
    6. Huang, Peter H & Wu, Ho-Mou, 1994. "More Order without More Law: A Theory of Social Norms and Organizational Cultures," Journal of Law, Economics, and Organization, Oxford University Press, vol. 10(2), pages 390-406, October.
    7. Berg Joyce & Dickhaut John & McCabe Kevin, 1995. "Trust, Reciprocity, and Social History," Games and Economic Behavior, Elsevier, vol. 10(1), pages 122-142, July.
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