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

  • Quang Nguyen

    (Division of Economics - Nanyang Technological University)

  • Marie Claire Villeval

    ()

    (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure (ENS) - Lyon - PRES Université de Lyon - Université Jean Monnet - Saint-Etienne - Université Claude Bernard - Lyon I)

  • Hui Xu

    (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure (ENS) - Lyon - PRES Université de Lyon - Université Jean Monnet - Saint-Etienne - Université Claude Bernard - Lyon I)

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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Paper provided by HAL in its series Working Papers with number halshs-00730609.

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Date of creation: 10 Sep 2012
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Handle: RePEc:hal:wpaper:halshs-00730609
Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00730609
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  1. Nava Ashraf & Iris Bohnet & Nikita Piankov, 2006. "Decomposing trust and trustworthiness," Experimental Economics, Springer, vol. 9(3), pages 193-208, September.
  2. Rainer, Helmut & Siedler, Thomas, 2006. "Does Democracy Foster Trust?," IZA Discussion Papers 2154, Institute for the Study of Labor (IZA).
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  13. 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.
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  16. Elaine M. Liu, 2013. "Time to Change What to Sow: Risk Preferences and Technology Adoption Decisions of Cotton Farmers in China," The Review of Economics and Statistics, MIT Press, vol. 95(4), pages 1386-1403, October.
  17. Bohnet, Iris & Zeckhauser, Richard, 2004. "Trust, risk and betrayal," Journal of Economic Behavior & Organization, Elsevier, vol. 55(4), pages 467-484, December.
  18. Dean S. Karlan, 2005. "Using Experimental Economics to Measure Social Capital and Predict Financial Decisions," American Economic Review, American Economic Association, vol. 95(5), pages 1688-1699, December.
  19. 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.
  20. Johnson, Noel D. & Mislin, Alexandra A., 2011. "Trust games: A meta-analysis," Journal of Economic Psychology, Elsevier, vol. 32(5), pages 865-889.
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  23. repec:feb:artefa:0077 is not listed on IDEAS
  24. 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.
  25. 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.
  26. 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.
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