Is There Reciprocity In A Reciprocal‐Exchange Economy? Evidence Of Gendered Norms From A Slum In Nairobi, Kenya

Norms of reciprocity help enforce cooperative agreements in bilateral sequential exchange. We examine the norms that apply in a reciprocal‐exchange economy. In our one‐shot investment game in a Nairobi slum, people adhered to the norm of “balanced reciprocity,” which obligates quid‐pro‐quo returns for any level of trust. The norm is gendered, with people more likely to comply when confronted with women rather than men, and differs from “conditional reciprocity,” prevalent in developed countries, according to which greater trust is rewarded with proportionally larger returns. Balanced reciprocity produces less trust and trustworthiness and smaller gains from trade than conditional reciprocity. (JEL C72, C91)