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Plausible Deniability and Cooperation in Trust Games

Author

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  • Gillies, Anthony S.
  • Rigdon, Mary L.

Abstract

What motivates agents to choose pro-social but dominated actions in principal-agent interactions like the trust game? We investigate this by exploring the role higher-order beliefs about payoffs play in an incentivized laboratory experiment. We consider a variety of ways of distributing higher order information about payoffs, including an asymmetrical distribution that generates “plausible deniability†: one agent (B) knows the other (A) doesn’t know that B knows how A’s payoffs are impacted by B’s actions. Agents, in turn, exploit this: otherwise trustworthy types are tempted into defecting when they have plausible deniability.

Suggested Citation

  • Gillies, Anthony S. & Rigdon, Mary L., 2019. "Plausible Deniability and Cooperation in Trust Games," Review of Behavioral Economics, now publishers, vol. 6(2), pages 1-95–118, April.
    • Handle: RePEc:now:jnlrbe:105.00000103
    DOI: 10.1561/105.00000103
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    More about this item

    Keywords

    Trust; reciprocity; social preferences; trust game; guilt aversion; behavioral economics; higher order beliefs;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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