Intentions behind disclosure to promote trust under short-termism: An experimental study

Satoshi Taguchi and Yoshio Kamijo

No SDES-2018-8, Working Papers from Kochi University of Technology, School of Economics and Management

Abstract: We experimentally examine the impact of varying intentions behind information disclosures on trust and　reciprocity between an investor and a manager during short-term transactions where reputations cannot be　established. To do so, we use a trust game with asymmetric information and conduct lab experiments,　comparing one unintentional disclosure condition and two intentional disclosure conditions. The results　reveal that information disclosure promotes investments and returns under all three conditions, even in short-term transactions. Further, compared with unintentional disclosure, intentional disclosure fosters greater trust and reciprocity between managers and investors. We also suggest that mutual trust can be developed even before reputation and a long-term relationship are formed. Our study sheds light on the merits of intentional disclosures from a short-term perspective and in particular, the practical　importance of institutional design for investors to acquire information.

Keywords: Disclosure; Short-termism; Experimental economics; Trust game; Gift exchange (search for similar items in EconPapers)
Pages: 48 pages
Date: 2018-10, Revised 2018-10
New Economics Papers: this item is included in nep-exp and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in SDE Series, October 2018, pages 1-48

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Persistent link: https://EconPapers.repec.org/RePEc:kch:wpaper:sdes-2018-8

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