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When trustors compete for the favour of a trustee – A laboratory experiment

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  • Bauernschuster, Stefan
  • Falck, Oliver
  • Große, Niels

Abstract

We experimentally compare standard two-player trust games to three-player trust games, where two trustors compete for one trustee. We argue that a competitive environment could affect how the trustors’ behaviour is perceived by the trustee. If two trustors compete for the favour of a trustee, the trustee might find it difficult to interpret the trustors’ investments as kind since they could as well be the outcome of a competitive race; this could negatively affect the trustee’s returned amount. We allow for heterogeneous effects of competition for strangers and artificially induced partners. The results of our one-shot trust games show that introducing competition among trustors reduces return ratios of the trustee. We do not find any evidence for statistically different effects of competition for partners and strangers.

Suggested Citation

  • Bauernschuster, Stefan & Falck, Oliver & Große, Niels, 2013. "When trustors compete for the favour of a trustee – A laboratory experiment," Journal of Economic Psychology, Elsevier, vol. 34(C), pages 133-147.
    • Handle: RePEc:eee:joepsy:v:34:y:2013:i:c:p:133-147
    DOI: 10.1016/j.joep.2012.09.004
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    Cited by:

    1. Jacob Goeree & Jingjing Zhang, 2014. "Communication & competition," Experimental Economics, Springer;Economic Science Association, vol. 17(3), pages 421-438, September.
    2. Tagat, Anirudh & Kapoor, Hansika, 2017. "The trust broker game: A three-player trust game with probabilistic returns and information asymmetry," Economics Discussion Papers 2017-33, Kiel Institute for the World Economy (IfW Kiel).
    3. Brandts, Jordi & Riedl, Arno, 2020. "Market interaction and efficient cooperation," European Economic Review, Elsevier, vol. 121(C).
    4. Bruni, Luigino & Tufano, Fabio, 2017. "The value of vulnerability: The transformative capacity of risky trust," Judgment and Decision Making, Cambridge University Press, vol. 12(4), pages 408-414, July.
    5. Shu-Heng Chen & Bin-Tzong Chie & Tong Zhang, 2015. "Network-Based Trust Games: An Agent-Based Model," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 18(3), pages 1-5.
    6. Brandts, J. & Riedl, A.M., 2016. "Market competition and efficient cooperation," Research Memorandum 006, Maastricht University, Graduate School of Business and Economics (GSBE).

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    More about this item

    Keywords

    Trust; Trustworthiness; Trust game; Competition; Framing;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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