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In money we trust? The use of financial compensations to repair trust in the aftermath of distributive harm

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  • Desmet, Pieter T.M.
  • Cremer, David De
  • Dijk, Eric van

Abstract

Trust is vital yet vulnerable in economic exchange relations. In these relations, a widely used strategy in response to distributive harm consists of having the transgressor pay a financial compensation to the victim. This research examines whether financial compensations can increase trust towards a transgressor, and whether the size of the compensation is relevant to this process. We hypothesized and found that whether larger compensations will elicit more trust, depends on how clear the perpetrator's intention to transgress was. Experiment 1 revealed that trust perceptions increased more by a slight overcompensation of the inflicted harm as compared to an exact or a partial compensation, but not if the transgressor's bad intentions became clear through the use of deception in the violation. In Experiments 2 and 3, we replicated these findings and further showed that it is not the use of deception per se, but rather the attribution of bad intent that moderates the effect of compensation size. Experiment 4, using a trust game paradigm revealed that this effect not only occurs for small overcompensations, but also for larger overcompensations.

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  • Desmet, Pieter T.M. & Cremer, David De & Dijk, Eric van, 2011. "In money we trust? The use of financial compensations to repair trust in the aftermath of distributive harm," Organizational Behavior and Human Decision Processes, Elsevier, vol. 114(2), pages 75-86, March.
    • Handle: RePEc:eee:jobhdp:v:114:y:2011:i:2:p:75-86
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