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Trust and Trustworthiness under the Prospect Theory: A Field Experiment in Vietnam

  • Nguyen, Quang

    ()

    (Nanyang Technological University, Singapore)

  • Villeval, Marie Claire

    ()

    (CNRS, GATE)

  • Xu, Hui

    ()

    (Beijing Normal University)

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 Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6851.

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Length: 61 pages
Date of creation: Sep 2012
Date of revision:
Handle: RePEc:iza:izadps:dp6851
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  1. Sutter, Matthias & Kocher, Martin G., 2007. "Trust and trustworthiness across different age groups," Games and Economic Behavior, Elsevier, vol. 59(2), pages 364-382, May.
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  14. 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..
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  16. 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.
  17. Nguyen, Quang & Villeval, Marie Claire & Xu, Hui, 2012. "Trust and Trustworthiness under the Prospect Theory: A Field Experiment in Vietnam," IZA Discussion Papers 6851, Institute for the Study of Labor (IZA).
  18. 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.
  19. Johnson, Noel D. & Mislin, Alexandra A., 2011. "Trust games: A meta-analysis," Journal of Economic Psychology, Elsevier, vol. 32(5), pages 865-889.
  20. Yann Algan & Pierre Cahuc, 2010. "Inherited Trust and Growth," Sciences Po publications info:hdl:2441/432sbils8u9, Sciences Po.
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  23. Nava Ashraf & Iris Bohnet & Nikita Piankov, 2006. "Decomposing trust and trustworthiness," Experimental Economics, Springer, vol. 9(3), pages 193-208, September.
  24. 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.
  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 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.
  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.
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