Auctioning the Right to Trust and Reciprocate: Scarcity, Market Allocation, and Selection in the Trust Game

Jason Shachat, J. Todd Swarthout and Yun Wang
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J. Todd Swarthout: Department of Economics, Georgia State University
Yun Wang: School of Economics, Renmin University of China

Working Papers from Chapman University, Economic Science Institute

Abstract: We examine how competitive allocation of scarce participation rights shapes behavior in a Berg-style trust game. Trustor and trustee roles are allocated through multi-unit uniform-price English auctions with varying scarcity, alongside a matched-fee random-assignment control treatment. Positive transfers and returns persist, but behavior lies near the low-trust, low-reciprocity end of comparable benchmarks. Tighter scarcity accelerates the decline in trustor transfers, while trustee returns show no monotonic pattern. Scarcity strongly raises auction prices without comparably raising participants’ gross trust-game earnings, thereby lowering net earnings. Exit bids adjust to past game profitability, indicating adaptive learning about the value of participation.

Keywords: Trust Game; trust game; Scarcity; Market Allocation; Participation Rights (search for similar items in EconPapers)
JEL-codes: C91 D82 D83 D84 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:chu:wpaper:26-12

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