Induced heterogeneity in trust experiments |
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Authors: | Lisa R. Anderson Jennifer M. Mellor Jeffrey Milyo |
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Affiliation: | (1) Department of Economics, College of William and Mary, Williamsburg;(2) Department of Economics and Truman School of Public Affairs, University of Missouri, USA |
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Abstract: | Several non-experimental studies claim that heterogeneity among individuals reduces trust. A few experimental studies have examined the effects of naturally-occurring differences among subjects on trusting behavior, and in contrast, most have not supported these claims. We adopt a novel approach by inducing heterogeneity among subjects in a canonical trust experiment. We accomplish this by varying the show-up payments given to subjects for participating in the experiment. We find that this induced inequality does not consistently affect first- or second-mover behavior in the classic trust game in the manner predicted by either previous theoretical work or empirical studies of survey-based measures of trust. Further, the effect of inequality on trust, in terms of both sign and significance, depends on whether show-up payments are awarded publicly or privately. JEL Classification C9, Z13 |
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Keywords: | Trust Social capital Inequality Experiment |
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