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Understanding Trust

Author

Listed:
  • Zingales, Luigi
  • Sapienza, Paola
  • Toldra Simats, Anna

Abstract

Several papers study the effect of trust by using the answer to the World Values Survey (WVS) question ?Generally speaking, would you say that most people can be trusted or that you can?t be too careful in dealing with people?? to measure the level of trust. Glaeser et al. (2000) question the validity of this measure by showing that it is not correlated with senders? behaviour in the standard trust game, but only with his trustworthiness. By using a large sample of German households, Fehr et al. (2003) find the opposite result: WVS-like measures of trust are correlated with the sender?s behaviour, but not with its trustworthiness. In this paper we resolve this puzzle by recognizing that trust has two components: a belief-based one and a preference based one. While the sender behaviour?s reflects both, we show that WVS-like measures capture mostly the belief-based component, while questions on past trusting behaviour are better at capturing the preference component of trust.

Suggested Citation

  • Zingales, Luigi & Sapienza, Paola & Toldra Simats, Anna, 2007. "Understanding Trust," CEPR Discussion Papers 6462, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:6462
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    References listed on IDEAS

    as
    1. Cox, James C., 2004. "How to identify trust and reciprocity," Games and Economic Behavior, Elsevier, vol. 46(2), pages 260-281, February.
    2. Ernst Fehr & Urs Fischbacher & Bernhard von Rosenbladt & J�rgen Schupp & Gert G. Wagner, "undated". "A Nation-Wide Laboratory: Examining trust and trustworthiness by integrating behavioral experiments into representative surveys," IEW - Working Papers 141, Institute for Empirical Research in Economics - University of Zurich.
    3. Ernst Fehr & Simon Gachter & Georg Kirchsteiger, 2001. "Reciprocity as a Contract Enforcement Device," Levine's Working Paper Archive 563824000000000143, David K. Levine.
    4. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
    5. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 817-868.
    6. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
    7. Guiso, Luigi & Sapienza, Paola & Zingales, Luigi, 2003. "People's opium? Religion and economic attitudes," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 225-282, January.
    8. Edward L. Glaeser & David I. Laibson & José A. Scheinkman & Christine L. Soutter, 2000. "Measuring Trust," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(3), pages 811-846.
      • Glaeser, Edward Ludwig & Laibson, David I. & Scheinkman, Jose A. & Soutter, Christine L., 2000. "Measuring Trust," Scholarly Articles 4481497, Harvard University Department of Economics.
    9. Gary Charness & Matthew Rabin, 2002. "Understanding Social Preferences with Simple Tests," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(3), pages 817-869.
    10. Vyrastekova, J. & Onderstal, A.M., 2005. "The Trust Game Behind the Veil of Ignorance : A Note on Gender Differences," Other publications TiSEM e07294af-b17a-4149-bb44-1, Tilburg University, School of Economics and Management.
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    More about this item

    Keywords

    Trust; Trust game; Trustworthiness;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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