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You Are Who Your Friends Are: An Experiment on Trust and Homophily in Friendship Networks

Author

Listed:
  • Fabian Winter

    () (Max-Planck Institute of Economics, Jena)

  • Mitesh Kataria

    () (Max-Planck Institute of Economics, Jena)

Abstract

We study the existence of homophily (i.e. the tendency for people to make friends with people who are similar to themselves) with respect to trustworthiness. We ask whether two friends show similarly trustworthy behavior towards strangers, and whether this is anticipated by outsiders. We develop a simple model of bayesian learning in trust games and test the derived hypotheses in a controlled laboratory environment. In the experiment, two trustees sequentially play a trust game with the same trustor, where the trustees depending on treatmen are either friends or strangers to each other. We affirm the existence of homophily with re- spect to trustworthiness. Trustors' beliefs about the trustees' trustfulness are not affected by the knowledge about the (non-)existent friendship between the trustees. Behaviorally, however, they indirectly reciprocate the (un-)trustworthy behavior of one trustee towards his/her friends in later interactions.

Suggested Citation

  • Fabian Winter & Mitesh Kataria, 2013. "You Are Who Your Friends Are: An Experiment on Trust and Homophily in Friendship Networks," Jena Economic Research Papers 2013-044, Friedrich-Schiller-University Jena.
  • Handle: RePEc:jrp:jrpwrp:2013-044
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    References listed on IDEAS

    as
    1. Kataria, Mitesh & Winter, Fabian, 2013. "Third party assessments in trust problems with conflict of interest: An experiment on the effects of promises," Economics Letters, Elsevier, vol. 120(1), pages 53-56.
    2. Casari, Marco & Cason, Timothy N., 2009. "The strategy method lowers measured trustworthy behavior," Economics Letters, Elsevier, vol. 103(3), pages 157-159, June.
    3. Stephen Leider & Markus M. Möbius & Tanya Rosenblat & Quoc-Anh Do, 2010. "What Do We Expect from Our Friends?," Journal of the European Economic Association, MIT Press, vol. 8(1), pages 120-138, March.
    4. K. R. Narayanan, 1954. "Freedom in Modern Society," India Quarterly: A Journal of International Affairs, , vol. 10(4), pages 376-381, October.
    5. Heiko Rauhut & Fabian Winter, 2009. "A sociological perspective on measuring social norms by means of strategy method experiments," Jena Economic Research Papers 2009-054, Friedrich-Schiller-University Jena.
    6. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
    7. Greiner, Ben, 2004. "An Online Recruitment System for Economic Experiments," MPRA Paper 13513, University Library of Munich, Germany.
    8. Jackson, Matthew O. & Watts, Alison, 2002. "The Evolution of Social and Economic Networks," Journal of Economic Theory, Elsevier, vol. 106(2), pages 265-295, October.
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    More about this item

    Keywords

    social networks; homophily; trust; friendship; indirect tit-for-tat;

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General

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