Beliefs and actions in the trust game: Creating instrumental variables to estimate the causal effect

Miguel Costa-Gomes, Steffen Huck and Georg Weizsäcker

Discussion Papers, Research Unit: Economics of Change from WZB Berlin Social Science Center

Abstract: In many economic contexts, an elusive variable of interest is the agent's belief about relevant events, e.g. about other agents' behavior. A growing number of surveys and experiments ask participants to state beliefs explicitly but little is known about the causal relation between beliefs and other behavioral variables. This paper discusses the possibility of creating exogenous instrumental variables for belief statements, by informing the agent about exogenous manipulations of the relevant events. We conduct trust game experiments where the amount sent back by the second player (trustee) is exogenously varied. The procedure allows detecting causal links from beliefs to actions under plausible assumptions. The IV-estimated effect is significant, confirming the causal role of beliefs. It is only slightly and insignificantly smaller than in estimations without instrumentation, consistent with a mild effect of social norms or other omitted variables.

Keywords: Social Capital; trust game; instrumental variables; belief elicitation (search for similar items in EconPapers)
JEL-codes: C72 C81 C91 D84 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-evo, nep-exp, nep-gth, nep-hpe and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Beliefs and actions in the trust game: Creating instrumental variables to estimate the causal effect (2014)
Journal Article: Beliefs and actions in the trust game: Creating instrumental variables to estimate the causal effect (2014)
Working Paper: Beliefs and Actions in the Trust Game: Creating Instrumental Variables to Estimate the Causal Effect (2010)
Working Paper: Beliefs and Actions in the Trust Game: Creating Instrumental Variables to Estimate the Causal Effect (2010)
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