Trust, lies, and inequality

Ninghua Du, Shan Gui and Daniel Houser

American Journal of Economics and Sociology, 2024, vol. 83, issue 1, 249-262

Abstract: The effect of endowment equality on trust may stem from outcome inequality aversion or changes in expected trustworthiness. Here, we measure trust as the expectation of honesty in a sender‐receiver game, where participants must make trust decisions without knowing the outcome. Our design enables us to isolate the effect of initial endowment inequality on trust. Our results show that endowment inequality reduces trust regardless of whether it favors the sender or the receiver. We further find that the frequency of lies is insensitive to endowment inequality. Our results amplify the importance of equal starting positions in promoting trust.

Date: 2024
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