Crowding Out Trust: The Adverse Effects of Verification. An Experiment

Gerardo A. Guerra

No 98, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: Through an experiment this study investigates the effects that verification has on honest traders. This paper demonstrates that by reducing the scope for trust verification can have a negative effect on the behaviour of honest individuals. Specifically, the analysis shows that trustworthy agents are willing to punish or seek compensation from those that deprive them of trust opportunities through the use of verification. Regulatory implications are discussed.

Keywords: verification; trust; ultimatum bargaining; experiments (search for similar items in EconPapers)
JEL-codes: C72 C78 C90 D18 D82 L86 (search for similar items in EconPapers)
Date: 2002-03-01
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Citations: View citations in EconPapers (3)

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