Plausible Deniability and Cooperation in Trust Games

Anthony S. Gillies and Mary Rigdon

Review of Behavioral Economics, 2019, vol. 6, issue 2, 95–118

Abstract: What motivates agents to choose pro-social but dominated actions in principal-agent interactions like the trust game? We investigate this by exploring the role higher-order beliefs about payoffs play in an incentivized laboratory experiment. We consider a variety of ways of distributing higher order information about payoffs, including an asymmetrical distribution that generates “plausible deniability†: one agent (B) knows the other (A) doesn’t know that B knows how A’s payoffs are impacted by B’s actions. Agents, in turn, exploit this: otherwise trustworthy types are tempted into defecting when they have plausible deniability.

Keywords: Trust; reciprocity; social preferences; trust game; guilt aversion; behavioral economics; higher order beliefs (search for similar items in EconPapers)
JEL-codes: C91 D82 D91 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:now:jnlrbe:105.00000103

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