Abstract

http://ssrn.com/abstract=2144021
 
 

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Building and Rebuilding Trust with Promises and Apologies


Eric Schniter


Chapman University - Economic Science Institute

Roman M. Sheremeta


Case Western Reserve University; Case Western Reserve University

Daniel Sznycer


University of California, Santa Barbara - Center for Evolutionary Psychology

September 9, 2012

Schniter, E. , Sheremeta, R.M., Sznycer, D. (2013). Building and rebuilding trust with promises and apologies. Journal of Economic Behavior and Organization. 94: 242-256.

Abstract:     
Using trust games, we study how promises and messages are used to build new trust where it did not previously exist and to rebuild damaged trust. In these games, trustees made non-binding promises of investment-contingent returns, then investors decided whether to invest, and finally trustees decided how much to return. After an unexpected second game was announced, but before it commenced, trustees could send a one-way message. This design allowed us to observe the endogenous emergence and natural distribution of trust-relevant behaviors and focus on naturally occurring remedial strategies used by promise-breakers and distrusted trustees, their effects on investors, and subsequent outcomes. In the first game 16.6% of trustees were distrusted and 18.8% of trusted trustees broke promises. Trustees distrusted in the first game used long messages and promises closer to equal splits to encourage trust in the second game. To restore damaged trust, promise-breakers used apologies and upgraded promises. On average, investments in each game paid off for investors and trustees, suggesting that effective use of cheap signals fosters profitable trust-based exchange in these economies.

Number of Pages in PDF File: 42

Keywords: promise, atonement, apology, cheap talk, cheap signals, trust game, trust building, remedial strategies, reciprocity, experiments

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Date posted: September 10, 2012 ; Last revised: November 1, 2013

Suggested Citation

Schniter, Eric and Sheremeta, Roman M. and Sznycer, Daniel, Building and Rebuilding Trust with Promises and Apologies (September 9, 2012). Schniter, E. , Sheremeta, R.M., Sznycer, D. (2013). Building and rebuilding trust with promises and apologies. Journal of Economic Behavior and Organization. 94: 242-256.. Available at SSRN: http://ssrn.com/abstract=2144021 or http://dx.doi.org/10.2139/ssrn.2144021

Contact Information

Eric Schniter (Contact Author)
Chapman University - Economic Science Institute ( email )
One University Dr.
Orange, CA 92866
United States
HOME PAGE: http://sites.google.com/site/ericschniter/
Roman M. Sheremeta
Case Western Reserve University ( email )
10900 Euclid Ave.
Cleveland, OH 44106
United States
Case Western Reserve University ( email )
Cleveland, CA 44106
United States
(216) 368-4271 (Phone)
HOME PAGE: http://sites.google.com/site/romansheremeta/
Daniel Sznycer
University of California, Santa Barbara - Center for Evolutionary Psychology ( email )
Santa Barbara, CA 93106-9660
United States
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