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Trust and risk revisited

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  • Fairley, Kim
  • Sanfey, Alan
  • Vyrastekova, Jana
  • Weitzel, Utz

Abstract

A trustor faces a risky choice in the trust game when he acts upon his belief regarding the chances of betrayal by the trustee. Despite intensive research there is no clear evidence for a link between lottery risk preferences and risk involved in trusting others. We argue that this is due to crucial differences between the risk measurements in the two settings. Trusting is giving up control to a human while lottery risk arises from a mechanistic randomization device. We propose a risky trust game that experimentally measures risk in the same context as the standard trust game, but nevertheless reduces the trust decision to objective risk. Our results show that transfers in the trust game can indeed be explained by individual risk attitudes elicited with the risky trust game, while lottery risk preferences have no explanatory power.

Suggested Citation

  • Fairley, Kim & Sanfey, Alan & Vyrastekova, Jana & Weitzel, Utz, 2016. "Trust and risk revisited," Journal of Economic Psychology, Elsevier, vol. 57(C), pages 74-85.
    • Handle: RePEc:eee:joepsy:v:57:y:2016:i:c:p:74-85
    DOI: 10.1016/j.joep.2016.10.001
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    Cited by:

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    2. Mike Farjam & Olexandr Nikolaychuk & Giangiacomo Bravo, 2018. "Does risk communication really decrease cooperation in climate change mitigation?," Climatic Change, Springer, vol. 149(2), pages 147-158, July.
    3. Bonowski, Tim & Minnameier, Gerhard, 2022. "Morality and trust in impersonal relationships," Journal of Economic Psychology, Elsevier, vol. 90(C).
    4. Füllbrunn, Sascha & Vyrastekova, Jana, 2023. "Does trust break even? A trust-game experiment with negative endowments," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 103(C).
    5. Giovanna GALLI & Marcello TEDESCHI & Maria Cristiana MARTINI, 2018. "The Frame Effect Revisited: Is Trust able to Transform People from Risk Averse to Risk Taker?," Journal of Emerging Trends in Marketing and Management, The Bucharest University of Economic Studies, vol. 1(1), pages 185-191, November.
    6. Chen Li & Uyanga Turmunkh & Peter P. Wakker, 2019. "Trust as a decision under ambiguity," Experimental Economics, Springer;Economic Science Association, vol. 22(1), pages 51-75, March.
    7. Polipciuc, Maria, 2022. "Group identity and betrayal: decomposing trust," ROA Research Memorandum 002, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    8. Dirk Engelmann & Jana Friedrichsen & Roel van Veldhuizen & Pauline Vorjohann & Joachim Winter, 2023. "Decomposing Trust," Rationality and Competition Discussion Paper Series 454, CRC TRR 190 Rationality and Competition.
    9. Farjam, Mike, 2019. "On whom would I want to depend; humans or computers?," Journal of Economic Psychology, Elsevier, vol. 72(C), pages 219-228.
    10. Giuseppe Albanese & Guido de Blasio & Paolo Sestito, 2017. "Trust, risk and time preferences: evidence from survey data," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 64(4), pages 367-388, December.
    11. Sofianos, Andis, 2022. "Self-reported & revealed trust: Experimental evidence," Journal of Economic Psychology, Elsevier, vol. 88(C).
    12. Gross, Till & Servátka, Maroš & Vadovič, Radovan, 2019. "Sequential vs. Simultaneous Trust," MPRA Paper 96343, University Library of Munich, Germany.
    13. van den Akker, Olmo R. & van Assen, Marcel A.L.M. & van Vugt, Mark & Wicherts, Jelte M., 2020. "Sex differences in trust and trustworthiness: A meta-analysis of the trust game and the gift-exchange game," Journal of Economic Psychology, Elsevier, vol. 81(C).

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    More about this item

    Keywords

    Trust; Trust game; Decision making under uncertainty; Risk; Sources of uncertainty;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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