Competition fosters trust

Steffen Huck, Gabriele K. Lünser and Jean-Robert Tyran

Games and Economic Behavior, 2012, vol. 76, issue 1, 195-209

Abstract: We study the effects of reputation and competition in a trust game. If trustees are anonymous, outcomes are poor: trustees are not trustworthy, and trustors do not trust. If trustees are identifiable and can, hence, build a reputation, efficiency quadruples but is still at only a third of the first best. Adding more information by granting trustors access to all trusteesʼ complete history has, somewhat surprisingly, no effect. On the other hand, we find that competition, coupled with some minimal information, eliminates the trust problem almost completely.

Keywords: Competition; Reputation; Trust; Moral hazard; Information conditions (search for similar items in EconPapers)
JEL-codes: C72 C92 D40 L14 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (80)

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Related works:
Working Paper: Competition Fosters Trust (2006)
Working Paper: Competition Fosters Trust (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:76:y:2012:i:1:p:195-209

DOI: 10.1016/j.geb.2012.06.010

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