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Intentions and Consequences An Experimental Investigation of Trust and Reciprocity Determinants

  • Werner Güth

    ()

    (Max Planck Institute of Economics, Strategic Interaction Group)

  • Harriet Mugera

    (School of Social Sciences, University of Trento, Italy)

  • Andrew Musau

    (School of Social Sciences, University of Trento, Italy; Faculty of Economics and Social Sciences, University of Agder, Norway)

  • Matteo Ploner

    (Cognitive and Experimental Economics Laboratory, University of Trento, Italy)

We experimentally manipulate the efficiency of trust and reciprocity in a modified Investment Game. The aim of our manipulation is to test whether reciprocity is mainly affected by payoff consequences of trust or by intentions underlying it. We find that intentions matter and that consequences have an asymmetric impact: trustees reward trust more when trust is more efficient but do not adjust rewards to the efficiency of their own actions. As a result, profitability of trust is fostered by efficiency of trust as well as by efficiency of reciprocity. However, trustors do not fully exploit the high efficiency gains offered by investments and display only moderate trust.

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Paper provided by Friedrich-Schiller-University Jena in its series Jena Economic Research Papers with number 2012-029.

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Date of creation: 20 Jun 2012
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Handle: RePEc:jrp:jrpwrp:2012-029
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