Trust and risk revisited

Kim Fairley, Alan Sanfey, Jana Vyrastekova and Utz Weitzel

Journal of Economic Psychology, 2016, vol. 57, issue C, 74-85

Abstract: A trustor faces a risky choice in the trust game when he acts upon his belief regarding the chances of betrayal by the trustee. Despite intensive research there is no clear evidence for a link between lottery risk preferences and risk involved in trusting others. We argue that this is due to crucial differences between the risk measurements in the two settings. Trusting is giving up control to a human while lottery risk arises from a mechanistic randomization device. We propose a risky trust game that experimentally measures risk in the same context as the standard trust game, but nevertheless reduces the trust decision to objective risk. Our results show that transfers in the trust game can indeed be explained by individual risk attitudes elicited with the risky trust game, while lottery risk preferences have no explanatory power.

Keywords: Trust; Trust game; Decision making under uncertainty; Risk; Sources of uncertainty (search for similar items in EconPapers)
JEL-codes: C7 D8 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:joepsy:v:57:y:2016:i:c:p:74-85

DOI: 10.1016/j.joep.2016.10.001

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