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

Miguel Costa-Gomes, Steffen Huck and Georg Weizsäcker

Games and Economic Behavior, 2014, vol. 88, issue C, 298-309

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 asks participants to state beliefs explicitly but little is known about the causal relation between beliefs and actions. 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.

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: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (75)

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Related works:
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 (2012)
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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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:88:y:2014:i:c:p:298-309

DOI: 10.1016/j.geb.2014.10.006

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