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Trust and Trustworthiness under the Prospect Theory: A field experiment in Vietnam

Listed author(s):
  • Quang Nguyen

    ()

    (Nanyang Technological University, 14 Nanyang Drive, Singapore 637332, Singapore)

  • Marie-Claire Villeval

    ()

    (University of Lyon, F-69007, France; GATE, CNRS, 93, Chemin de Mouilles, F-69130, Ecully, France; IZA, Bonn, Germany)

  • Hui Xu

    ()

    (University of Lyon, F-69007, France; GATE, CNRS, 93, Chemin de Mouilles, F-69130, Ecully, France)

We study the influence of risk and time preferences on trust and trustworthiness by conducting a field experiment in Vietnamese villages and by estimating the parameters of the Cumulative Prospect Theory and of quasi-hyperbolic time preferences. We find that while probability sensitivity or risk aversion do not affect trust, loss aversion influences trust indirectly by lowering the expectations of return. Also, more risk averse and less present biased participants are found to be trustworthier. The experience of receiving remittances influences behavior and a longer exposure to a collectivist economy tend to reduce trust and trustworthiness.

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File URL: ftp://ftp.gate.cnrs.fr/RePEc/2012/1226.pdf
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Paper provided by Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure in its series Working Papers with number 1226.

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Date of creation: 2012
Handle: RePEc:gat:wpaper:1226
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