Natural and Strategic Generosity as Signals of Trustworthiness

Abstract

We exploit the fact that generosity and trustworthiness are highly correlated and the former can thus be a sign of the latter. Subjects decide between a generous and a mean split in a dictator game. Some of them are informed from the start that afterwards they will participate in a trust game and that their choice in the dictator game may matter; others are not informed in advance. In the trust game, before trusters decide whether or not to trust, some trustees can reveal (or conceal) only their true choice in the dictator game, while others can say to trusters, truthfully or otherwise, what they chose. We find that a generous choice made naturally by uninformed trustees and reliably revealed is more effective in persuading trusters to trust than a generous choice that could be strategic or a lie. Moreover, we find that, when they can, mean subjects lie and go on to be untrustworthy.

Choosing a partner for social exchange: Charitable giving as a signal of trustworthiness

“…In an earlier study, Fehrler and Przepiorka (2013) show that donors to charity indeed tend to be more trustworthy than nondonors (see also Albert et al 2007). Game-theoretic models illustrating the idea that charitable giving can work as a signal of trustworthiness have been proposed by Elfenbein et al (2012) and Ong and Yang (2014) (see also Gintis et al 2001;Gambetta and Przepiorka 2014). Elfenbein et al (2012) also present convincing empirical evidence of how charitable giving can work as a signal of trustworthiness.…”

“…in a repeated interaction (e.g., Camerer and Weigelt 1988;Anderhub et al 2002;Bolton et al 2004a;Bracht and Feltovich 2009), or because of other-regarding preferences, reciprocity or trust responsiveness (e.g., McCabe et al 2003;Cox 2004;Bolton et al 2004b;Bacharach et al 2007;Battigalli and Dufwenberg 2009;Toussaert 2014). Theoretical models (e.g., Fehr and Schmidt 1999) and empirical evidence (e.g., Ashraf et al 2006) both suggest that trustees who are trustworthy because of other-regarding preferences will also be more generous, e.g., in a dictator game, even if such generosity has no instrumental value (Gambetta and Przepiorka 2014;Przepiorka and Liebe 2016). In an earlier study, Fehrler and Przepiorka (2013) show that donors to charity indeed tend to be more trustworthy than nondonors (see also Albert et al 2007).…”

Signs and (counter)signals of trustworthiness

“…They are by-products of our actions rather than being produced by us in order to send a particular message. On the one hand, the lack of intention to inform makes signs a source of reliable information-for instance, small gestures of generosity when it is clear that they are not carried out instrumentally are signs of genuine generosity (Gambetta and Przepiorka, 2014). On the other hand, the information that signs convey tends to be noisy: while raising the probability that an agent has or lacks a certain quality, they often fall short of providing full reassurance.…”

“…We exploit the fact that generosity is correlated with trustworthiness and can thus be a sign and a signal of the latter (Ashraf et al, 2006, p. 202;Gambetta and Przepiorka, 2014).…”

“…With a few exceptions (Fehrler and Przepiorka, 2013;Gambetta and Przepiorka, 2014), in studies of signalling (including Feltovich et al's experiment), experimenters randomly assign participants their type and corresponding payoffs. This exogenous attribution of type relies on an unrealistic ability to switch type at will, on a mental plasticity which is not in everyone's gift: subjects who in the real-world belong to one type may be assigned a different type in the lab, and while some subjects may adapt to the incentive structure provided by the experimenter, in other cases their imprinted habits may A truster has to believe that the probability of the trustee playing return is greater than or equal to 0.5 before choosing to pass.…”