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A trust game in loss domain

Author

Listed:
  • Kvaløy, Ola

    (UiS)

  • Luzuriaga, Miguel

    (UiS)

Abstract

In standard trust games, no trust is the default, and trust generates a potential gain. We investigate a reframed trust game in which full trust is default and where no trust generates a loss. We find significantly lower levels of trust and trustworthiness in loss domain when full trust is default than in gain domain when no trust is default. As a consequence, trust is on average profitable in gain domain, but not in loss domain. We also find that subjects respond more positively to higher trust in loss domain than in gain domain.

Suggested Citation

  • Kvaløy, Ola & Luzuriaga, Miguel, 2014. "A trust game in loss domain," UiS Working Papers in Economics and Finance 2014/6, University of Stavanger.
  • Handle: RePEc:hhs:stavef:2014_006
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    More about this item

    Keywords

    Trust; Reciprocity; Framing; Defaults; Reference Points; Experiment;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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