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Intentions behind disclosure to promote trust under short-termism: An experimental study

Author

Listed:
  • Satoshi Taguchi

    (Doshisha University)

  • Yoshio Kamijo

    (School of Economics and Management, Kochi University of Technology)

Abstract

We experimentally examine the impact of varying intentions behind information disclosures on trust and reciprocity between an investor and a manager during short-term transactions where reputations cannot be established. To do so, we use a trust game with asymmetric information and conduct lab experiments, comparing one unintentional disclosure condition and two intentional disclosure conditions. The results reveal that information disclosure promotes investments and returns under all three conditions, even in short-term transactions. Further, compared with unintentional disclosure, intentional disclosure fosters greater trust and reciprocity between managers and investors. We also suggest that mutual trust can be developed even before reputation and a long-term relationship are formed. Our study sheds light on the merits of intentional disclosures from a short-term perspective and in particular, the practical importance of institutional design for investors to acquire information.

Suggested Citation

  • Satoshi Taguchi & Yoshio Kamijo, 2018. "Intentions behind disclosure to promote trust under short-termism: An experimental study," Working Papers SDES-2018-8, Kochi University of Technology, School of Economics and Management, revised Oct 2018.
  • Handle: RePEc:kch:wpaper:sdes-2018-8
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    File URL: http://www.souken.kochi-tech.ac.jp/seido/wp/SDES-2018-8.pdf
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    References listed on IDEAS

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    Keywords

    Disclosure; Short-termism; Experimental economics; Trust game; Gift exchange;
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