Trust and trustworthiness after negative random shocks

Article


Bejarano, H., Gillet, J. and Rodriguez-Lara, I. 2021. Trust and trustworthiness after negative random shocks. Journal of Economic Psychology. 86. https://doi.org/10.1016/j.joep.2021.102422
TypeArticle
TitleTrust and trustworthiness after negative random shocks
AuthorsBejarano, H., Gillet, J. and Rodriguez-Lara, I.
Abstract

We experimentally investigate the effect of a negative endowment shock that can cause inequality in a trust game. Our goal is to assess whether different causes of inequality have different effects on trust and trustworthiness. In our trust game, we vary whether there is inequality (in favor of the second mover) or not and whether the inequality results from a random negative shock (i.e., the outcome of a die roll) or exists from the outset. Our findings suggest that inequality causes first-movers to send more of their endowment and second-movers to return more. However, we do not find support for the hypothesis that the cause of the inequality matters. Behavior after the occurrence of a random shock is not significantly different from the behavior in treatments where the inequality exists from the outset. Our results highlight the need to be cautious when interpreting the effects on trust and trustworthiness of negative random shocks in the field (such as natural disasters). Our results suggest that these effects are primarily driven by the inequality caused by the shock and not by any of the additional characteristics of the shock, like saliency or uncertainty.

KeywordsTrust game; Endowment heterogeneity; Random shocks; Inequality aversion; Experimental economics
PublisherElsevier
JournalJournal of Economic Psychology
ISSN0167-4870
Publication dates
Online15 Jul 2021
Print01 Oct 2021
Publication process dates
Deposited26 Jul 2021
Accepted09 Jul 2021
Output statusPublished
Accepted author manuscript
License
Copyright Statement

© 2021. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/.

Digital Object Identifier (DOI)https://doi.org/10.1016/j.joep.2021.102422
LanguageEnglish
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