Trusting behavior in a repeated investment game

Cochard, François; Nguyen-Van, Phu; Willinger, Marc

doi:10.1016/j.jebo.2003.07.004

Cited by 114 publications

(90 citation statements)

References 16 publications

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“…All conditions except Fixed incentives led to higher trust and trustworthiness than the Baseline. Finally, all cooperation indicators declined during the game, confirming the typical "end effect" found in previous studies [9,22,37].…”

Section: Comparing the Two Experimentssupporting

confidence: 88%

Intermediaries in Trust: Indirect Reciprocity, Incentives, and Norms

Bravo

Squazzoni

Takács

2015

Journal of Applied Mathematics

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Any trust situation involves a certain amount of risk for trustors that trustees could abuse. In some cases, intermediaries exist who play a crucial role in the exchange by providing reputational information. To examine under what conditions intermediary opinion could have a positive impact on cooperation, we designed two experiments based on a modified version of the investment game where intermediaries rated the behaviour of trustees under various incentive schemes and different role structures. We found that intermediaries can increase trust if there is room for indirect reciprocity between the involved parties. We also found that the effect of monetary incentives and social norms cannot be clearly separable in these situations. If properly designed, monetary incentives for intermediaries can have a positive effect. On the one hand, when intermediary rewards are aligned with the trustor's interest, investments and returns tend to increase. On the other hand, fixed monetary incentives perform less than any other incentive schemes and endogenous social norms in ensuring trust and fairness. These findings should make us reconsider the mantra of incentivization of social and public conventional policy.

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Section: Comparing the Two Experimentssupporting

confidence: 88%

Intermediaries in Trust: Indirect Reciprocity, Incentives, and Norms

Bravo

Squazzoni

Takács

2015

Journal of Applied Mathematics

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“…The investment game is just an extension of the (mini) trust game with binary choices re ‡ected in Figure 1 to a situation where both players have multiple available choices. Cochard et al (2004) compare seven round investment games with one round investment games. Their main …nding is that repetition increases trust on average, although there is a clear end round e¤ect.…”

Section: Related Experimentsmentioning

confidence: 99%

The Interaction Between Explicit and Relational Incentives: An Experiment

Sloof

Sonnemans

2009

SSRN Journal

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We consider repeated trust game experiments to study the interplay between explicit and relational incentives. After having gained experience with two payo¤ variations of the trust game, subjects in the …nal part explicitly choose which of these two variants to play. Theory predicts that subjects will choose the payo¤ dominated game (representing a bad explicit contract), because this game better sustains (implicit) relational incentives backed by either reputational or reciprocity considerations. We also explicitly test how game choice is a¤ected by the length of the repeated game.

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“…Evidence for the crucial role of a good reputation in social decision making comes from empirical studies showing that individuals increase their levels of cooperation and are more likely to comply with norms when they know that others observe their behavior, and that individuals cooperate with those whom they observe cooperating with others (1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)(14)(15)(16). Thus, the concern for reputation profoundly affects our daily social interactions and motivates many important decisions in our lives.…”

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confidence: 99%

Disrupting the prefrontal cortex diminishes the human ability to build a good reputation

Knoch

Schneider²,

Schunk³

et al. 2009

Proc. Natl. Acad. Sci. U.S.A.

147

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Reputation formation pervades human social life. In fact, many people go to great lengths to acquire a good reputation, even though building a good reputation is costly in many cases. Little is known about the neural underpinnings of this important social mechanism, however. In the present study, we show that disruption of the right, but not the left, lateral prefrontal cortex (PFC) with low-frequency repetitive transcranial magnetic stimulation (rTMS) diminishes subjects' ability to build a favorable reputation. This effect occurs even though subjects' ability to behave altruistically in the absence of reputation incentives remains intact, and even though they are still able to recognize both the fairness standards necessary for acquiring and the future benefits of a good reputation. Thus, subjects with a disrupted right lateral PFC no longer seem to be able to resist the temptation to defect, even though they know that this has detrimental effects on their future reputation. This suggests an important dissociation between the knowledge about one's own best interests and the ability to act accordingly in social contexts. These results link findings on the neural underpinnings of self-control and temptation with the study of human social behavior, and they may help explain why reputation formation remains less prominent in most other species with less developed prefrontal cortices.decision making ͉ social interaction ͉ transcranial magnetic stimulation

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Trusting behavior in a repeated investment game

Cited by 114 publications

References 16 publications

Intermediaries in Trust: Indirect Reciprocity, Incentives, and Norms

Intermediaries in Trust: Indirect Reciprocity, Incentives, and Norms

The Interaction Between Explicit and Relational Incentives: An Experiment

Disrupting the prefrontal cortex diminishes the human ability to build a good reputation

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