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Words Speak Louder Than Money

Maroš Servátka (), Steven Tucker () and Radovan Vadovic ()

Working Papers in Economics from University of Canterbury, Department of Economics and Finance

Abstract: Should one use words or money to foster trust of the other party if no means of enforcing trustworthiness are available? This paper reports an experiment studying the effectiveness of two types of mechanisms for promoting trust: a costly gift and a costless message as well as their mutual interaction. We nest our findings in the standard version of the investment game. Our data provide evidence that while both stand-alone mechanisms enhance trust, and a gift performs significantly worse than a message. Moreover, when a gift is combined with sending a message, it can be counterproductive.

Keywords: Communication; content analysis; experimental economics; gift giving; investment game; message; trust; trustworthiness (search for similar items in EconPapers)
JEL-codes: C70 C91 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-exp, nep-gth, nep-hpe and nep-soc
Date: 2011-04-10
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Citations: View citations in EconPapers (13) Track citations by RSS feed

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http://www.econ.canterbury.ac.nz/RePEc/cbt/econwp/1113.pdf (application/pdf)

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Journal Article: Words speak louder than money (2011) Downloads
Working Paper: Words Speak Louder Than Money (2008) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:cbt:econwp:11/13

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