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

  • 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
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Handle: RePEc:gat:wpaper:1226
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  1. Quang Nguyen & Marie Claire Villeval & Hui Xu, 2012. "Trust and Trustworthiness under the Prospect Theory: A field experiment in Vietnam," Working Papers halshs-00730609, HAL.
  2. Helmut Rainer & Michael Siedler, 2006. "Does democracy foster trust?," Discussion Paper Series, Department of Economics 200602, Department of Economics, University of St. Andrews.
  3. Bohnet, Iris & Zeckhauser, Richard, 2004. "Trust, risk and betrayal," Journal of Economic Behavior & Organization, Elsevier, vol. 55(4), pages 467-484, December.
  4. Bellemare, Charles & Kröger, Sabine, 2003. "On Representative Trust," SFB 373 Discussion Papers 2003,24, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
  5. Ernst Fehr, 2008. "On the Economics and Biology of Trust," SOEPpapers on Multidisciplinary Panel Data Research 154, DIW Berlin, The German Socio-Economic Panel (SOEP).
  6. Schechter, Laura, 2007. "Traditional trust measurement and the risk confound: An experiment in rural Paraguay," Journal of Economic Behavior & Organization, Elsevier, vol. 62(2), pages 272-292, February.
  7. Elaine Meichen Liu, 2008. "Time to Change What to Sow: Risk Preferences and Technology Adoption Decisions of Cotton Farmers in China," Working Papers 1064, Princeton University, Department of Economics, Industrial Relations Section..
  8. James Andreoni & John Miller, 2002. "Giving According to GARP: An Experimental Test of the Consistency of Preferences for Altruism," Econometrica, Econometric Society, vol. 70(2), pages 737-753, March.
  9. Dean Karlan, 2004. "Using experimental economics to measure social capital and predict financial decisions," Artefactual Field Experiments 00074, The Field Experiments Website.
  10. Sutter, Matthias & Kocher, Martin G., 2007. "Trust and trustworthiness across different age groups," Munich Reprints in Economics 18182, University of Munich, Department of Economics.
  11. Bellemare, Charles & Kröger, Sabine, 2004. "On Representative Social Capital," IZA Discussion Papers 1145, Institute for the Study of Labor (IZA).
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  13. Jeffrey Carpenter & Amrita Daniere & Lois Takahashi, 2003. "Cooperation, Trust, and Social Capital in Southeast Asian Urban Slums," Middlebury College Working Paper Series 0309, Middlebury College, Department of Economics.
  14. Jordi Brandts & Gary Charness, 2011. "The strategy versus the direct-response method: a first survey of experimental comparisons," Experimental Economics, Springer, vol. 14(3), pages 375-398, September.
  15. Johnson, Noel D. & Mislin, Alexandra A., 2011. "Trust games: A meta-analysis," Journal of Economic Psychology, Elsevier, vol. 32(5), pages 865-889.
  16. Nguyen Viet Cuong, 2009. "The impact of international and internal remittances on household welfare: evidence from Viet Nam," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 16(1), pages 59-92, June.
  17. repec:dgr:kubcen:200347 is not listed on IDEAS
  18. Niimi, Yoko & Pham, Thai Hung & Reilly, Barry, 2008. "Determinants of remittances : recent evidence using data on internal migrants in Vietnam," Policy Research Working Paper Series 4586, The World Bank.
  19. Nguyen Viet, Cuong, 2008. "Impacts of International and Internal Remittances on Household Welfare: Evidence from Viet Nam," MPRA Paper 25770, University Library of Munich, Germany.
  20. Houser, Daniel & Schunk, Daniel & Winter, Joachim, 2010. "Distinguishing trust from risk: An anatomy of the investment game," Munich Reprints in Economics 19378, University of Munich, Department of Economics.
  21. repec:feb:artefa:0077 is not listed on IDEAS
  22. Nava Ashraf & Iris Bohnet & Nikita Piankov, 2006. "Decomposing trust and trustworthiness," Experimental Economics, Springer, vol. 9(3), pages 193-208, September.
  23. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
  24. Eckel, Catherine C. & Wilson, Rick K., 2004. "Is trust a risky decision?," Journal of Economic Behavior & Organization, Elsevier, vol. 55(4), pages 447-465, December.
  25. Maarten J. Voors & Eleonora E. M. Nillesen & Philip Verwimp & Erwin H. Bulte & Robert Lensink & Daan P. Van Soest, 2012. "Violent Conflict and Behavior: A Field Experiment in Burundi," American Economic Review, American Economic Association, vol. 102(2), pages 941-64, April.
  26. 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.
  27. Tomomi Tanaka & Colin F. Camerer & Quang Nguyen, 2010. "Risk and Time Preferences: Linking Experimental and Household Survey Data from Vietnam," American Economic Review, American Economic Association, vol. 100(1), pages 557-71, March.
  28. Tversky, Amos & Kahneman, Daniel, 1992. " Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
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