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Competition vs. communication: An experimental study on restoring trust

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  • Lei, Vivian
  • Masclet, David
  • Vesely, Filip

Abstract

Trust is fragile. It is hard to build but easy to destroy. In this paper, we explore the fragility of trust in a stylized laboratory environment. We ask whether transgression outside a direct send-and-return relationship destroys trust and, if so, whether a competition against outsiders or an apology for misdeeds helps restore it. We find that transgression significantly reduces trust and that the broken trust can be greatly restored by group competition. Communication via an apology, impersonal or not, has an insignificant impact. By contrast, offering explanations for misbehavior is as effective as group competition.

Suggested Citation

  • Lei, Vivian & Masclet, David & Vesely, Filip, 2014. "Competition vs. communication: An experimental study on restoring trust," Journal of Economic Behavior & Organization, Elsevier, vol. 108(C), pages 94-107.
    • Handle: RePEc:eee:jeborg:v:108:y:2014:i:c:p:94-107
    DOI: 10.1016/j.jebo.2014.09.001
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    3. Martin Brown & Jan Schmitz & Christian Zehnder, 2018. "Communication, Credit Provision and Loan Repayment: Evidence from a Person-to-Person Lending Experiment," Working Papers on Finance 1819, University of St. Gallen, School of Finance, revised Aug 2020.
    4. Arriaga Costa, Carlos & Petiz Pereira, Orlando, 2019. "Values and trust in human capital: University students’ perceptions, 2015-2017," Revista Galega de Economía, University of Santiago de Compostela. Faculty of Economics and Business., vol. 28(1), pages 102-116.

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    More about this item

    Keywords

    Experiments; Trust restoration; Group competition; Communication;
    All these keywords.

    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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