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Assigning Intentions when Actions are Unobservable: the Impact of Trembling in the Trust Game

  • James C. Cox
  • Cary A. Deck

This paper reports laboratory experiments investigating behavior when players may make inferences about the intentions behind others' prior actions based on higher- or lower-accuracy information about those actions. We investigate a trust game with first mover trembling, a game in which nature determines whether the first mover's decision is implemented or reversed. The results indicate that second movers give first movers the benefit of the doubt. However, first movers do not anticipate this response. Ultimately, it appears that subjects are thinking on at least three levels when making decisions: they are concerned with their own material well being, the trustworthiness of their counterpart, and how their own actions will be perceived.

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File URL: http://excen.gsu.edu/workingpapers/GSU_EXCEN_WP_2006-01.pdf
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Paper provided by Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University in its series Experimental Economics Center Working Paper Series with number 2006-01.

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Handle: RePEc:exc:wpaper:2006-01
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  1. Falk, Armin & Fehr, Ernst & Fischbacher, Urs, 2001. "On the Nature of Fair Behaviour," CEPR Discussion Papers 2984, C.E.P.R. Discussion Papers.
  2. Fehr, Ernst & Schmidt, Klaus M., . "A theory of fairness, competition, and cooperation," Chapters in Economics, University of Munich, Department of Economics.
  3. Cox, James C., 2004. "How to identify trust and reciprocity," Games and Economic Behavior, Elsevier, vol. 46(2), pages 260-281, February.
  4. Guth, Werner & Tietz, Reinhard, 1990. "Ultimatum bargaining behavior : A survey and comparison of experimental results," Journal of Economic Psychology, Elsevier, vol. 11(3), pages 417-449, September.
  5. James C. Cox & Cary A. Deck, 2005. "On the Nature of Reciprocal Motives," Economic Inquiry, Western Economic Association International, vol. 43(3), pages 623-635, July.
  6. McCabe, Kevin A. & Rigdon, Mary L. & Smith, Vernon L., 2003. "Positive reciprocity and intentions in trust games," Journal of Economic Behavior & Organization, Elsevier, vol. 52(2), pages 267-275, October.
  7. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
  8. James C. Cox & Cary A. Deck, 2006. "When are Women More Generous than Men?," Experimental Economics Center Working Paper Series 2006-07, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.
  9. Iris Bohnet & Bruno S. Frey & Steffen Huck, . "More Order with Less Law: On Contract Enforcement, Trust, and Crowding," IEW - Working Papers 052, Institute for Empirical Research in Economics - University of Zurich.
  10. James C. Cox & Vjollca Sadiraj, . "Direct Tests of Models of Social Preferences and a New Model," Experimental Economics Center Working Paper Series 2006-13, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University, revised Jul 2010.
  11. Guth, Werner & Huck, Steffen & Muller, Wieland, 2001. "The Relevance of Equal Splits in Ultimatum Games," Games and Economic Behavior, Elsevier, vol. 37(1), pages 161-169, October.
  12. Cary A. Deck, 2001. "A Test of Game-Theoretic and Behavioral Models of Play in Exchange and Insurance Environments," American Economic Review, American Economic Association, vol. 91(5), pages 1546-1555, December.
  13. 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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