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Competition vs. communication: An experimental study on restoring trust

Author

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  • Vivian Lei

    (Department of Economics - University of Wisconsin - Milwaukee)

  • David Masclet

    (CIRANO - Centre interuniversitaire de recherche en analyse des organisations - UQAM - Université du Québec à Montréal = University of Québec in Montréal, CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

  • Filip Vesely

    (Department of Economics - University of Wisconsin - Milwaukee)

Abstract

Trust is fragile. It is hard to build but easy to destroy. In this paper, we explore the fragility of trust in a stylized laboratory environment. We ask whether transgression outside a direct send-and-return relationship destroys trust and, if so, whether a competition against outsiders or an apology for misdeeds helps restore it. We find that transgression significantly reduces trust and that the broken trust can be greatly restored by group competition. Communication via an apology, impersonal or not, has an insignificant impact. By contrast, offering explanations for misbehavior is as effective as group competition.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Vivian Lei & David Masclet & Filip Vesely, 2014. "Competition vs. communication: An experimental study on restoring trust," Post-Print halshs-01074083, HAL.
  • Handle: RePEc:hal:journl:halshs-01074083
    DOI: 10.1016/j.jebo.2014.09.001
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01074083
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    Cited by:

    1. Brown, Martin & Schmitz, Jan & Zehnder, Christian, 2024. "Communication and hidden action: A credit market experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 218(C), pages 423-455.
    2. David Masclet & Clemens Puppe, 2015. "Introduction to the special issue “Experiments on conflicts and conflict resolution”," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 45(3), pages 479-488, October.
    3. Martin Brown & Jan Schmitz & Christian Zehnder, 2018. "Communication, Credit Provision and Loan Repayment: Evidence from a Person-to-Person Lending Experiment," Working Papers on Finance 1819, University of St. Gallen, School of Finance, revised Aug 2020.
    4. Arriaga Costa, Carlos & Petiz Pereira, Orlando, 2019. "Values and trust in human capital: University students’ perceptions, 2015-2017," Revista Galega de Economía, University of Santiago de Compostela. Faculty of Economics and Business., vol. 28(1), pages 102-116.

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    More about this item

    Keywords

    communication; Experiments; group competition; trust restoration;
    All these keywords.

    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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