Experimental Analysis of the Effect of Risk Perception on Trust

Hasan Mert Kayaaslan and Erdem SEÇİLMİŞ

Fiscaoeconomia, 2024, issue 2

Abstract: This study examines whether individuals with different risk attitudes exhibit different behaviors in trust-based relationships and whether experienced trust relationships influence risk attitudes and preferences. An original hybrid design is employed via experimental economic methods, which are becoming increasingly popular in the literature. The multiple price list developed by Holt & Laury (2002) is used to analyze individuals' risk preferences. To analyze the trust relationship between individuals, a version of the classic trust game introduced by Berg, Dickhaut & McCabe (1995) is preferred. The data obtained from the experiment are analyzed using various statistical tests and econometric methods. The findings indicate that risk preferences do not have a decisive role in trust decisions. However, it has been observed that trust experiences do influence individuals' risk preferences. When individuals consider a gain, their inclination to take risks decreases. Additionally, it is considered that individuals interpret transfers made to them as signals of increased cooperation, leading them to take more risks and approach the social optimum.

Keywords: Trust; Risk; Experiment (search for similar items in EconPapers)
JEL-codes: Z13 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:fis:journl:240210

DOI: 10.25295/fsecon.1424670

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