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A trust game in loss domain

Author

Listed:
  • Ola Kvaløy

    (University of Stavanger)

  • Miguel Luzuriaga

    (Neu-Ulm University of Applied Sciences)

  • Trond E. Olsen

    (Norwegian School of Economics)

Abstract

In standard trust games, no trust is the default, and trust generates a potential gain. We investigate a reframed trust game in which full trust is default and where no trust generates a loss. We find significantly lower levels of trust and trustworthiness in the loss domain when full trust is default than in the gain domain when no trust is default. As a consequence, trust is on average profitable in the gain domain, but not in the loss domain. We also find that subjects respond more positively to higher trust in the loss domain than in the gain domain.

Suggested Citation

  • Ola Kvaløy & Miguel Luzuriaga & Trond E. Olsen, 2017. "A trust game in loss domain," Experimental Economics, Springer;Economic Science Association, vol. 20(4), pages 860-877, December.
    • Handle: RePEc:kap:expeco:v:20:y:2017:i:4:d:10.1007_s10683-017-9514-7
    DOI: 10.1007/s10683-017-9514-7
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    More about this item

    Keywords

    Trust; Reciprocity; Framing; Defaults; Reference points; Experiment;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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