Would You Trust Yourself? On the Long-Run Stability of Reciprocal Trust
University of Hamburg - Institute of Allocation and Competition (IAW)
November 15, 2010
Preferences for reciprocity of the Falk-Fischbacher type are applied to a game of trust. After deriving the reciprocity equilibrium, the evolution of preferences is analysed showing that a medium level of reciprocity is evolutionary stable. If players exhibit different inclinations regarding positive and negative reciprocity, a medium level of positive reciprocity remains stable but negative reciprocity must vanish. In both cases, players should show a level of reciprocity such that they would exactly trust themselves. The evolutionary equilibrium is characterized neither by efficiency (besides perfect information) nor by equity, although equity is used as a reference standard.
Number of Pages in PDF File: 20
Keywords: Trust, Reciprocity, Psychological Games, Indirect Evolution
JEL Classification: C73, D03, D63working papers series
Date posted: November 15, 2010
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo5 in 0.547 seconds