When Institutions Induce Trust: Insights from EEG and Timed-Response Experiments

Abstract:     
While much is known about citizens' decisions to trust others, much less is known about the cognitive mechanisms underlying these decisions. Thus, we analyze both the behavior and brain activity associated with these decisions by replicating well known experiments on trust with electroencephalograph (EEG) and timed-response technology. Although our behavioral results are consistent with previous research, our EEG results reveal something about trust that we do not learn from observing subjects' decisions and reaction times. Specifically, they demonstrate that subjects process information differently when it comes from someone who is trustworthy by virtue of sharing common interests versus someone who is made trustworthy by an external institution. This processing difference exists even though subjects are equally likely to base their decisions upon the statements of these two trustworthy individuals, and even though they take the same amount of time to make their decisions. Given these differences between subjects' behavior and brain activity, it appears that recording EEGs adds a new dimension to our understanding of subjects' decisions to trust the statements of others.

Number of Pages in PDF File: 46

Keywords: trust, institution, decision, EEG, neuroscience, experiment, reaction time, cognition

JEL Classification: C90

working papers series