Trust and the Reference Points for Trustworthiness in Gulf and Western Countries
Why is private investment so low in Gulf compared to Western countries? We investigate cross-regional differences in trust and reference points for trustworthiness as possible factors. Experiments controlling for cross-regional differences in institutions and beliefs about trustworthiness reveal that Gulf citizens pay much more than Westerners to avoid trusting, and hardly respond when returns to trusting change. These differences can be explained by subjectsâ€™ gain/loss utility relative to their regionâ€™s reference point for trustworthiness. The relation-based production of trust in the Gulf induces higher levels of trustworthiness, albeit within groups, than the rule-based interactions prevalent in the West.
|Date of creation:||2009|
|Publication status:||Published in HKS Faculty Research Working Paper Series|
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