Crowding Out Trust: The Adverse Effects of Verification. An Experiment
Through an experiment this study investigates the effects that verification has on honest traders. This paper demonstrates that by reducing the scope for trust verification can have a negative effect on the behaviour of honest individuals. Specifically, the analysis shows that trustworthy agents are willing to punish or seek compensation from those that deprive them of trust opportunities through the use of verification. Regulatory implications are discussed.
|Date of creation:||01 Mar 2002|
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