Understanding Trust

31 Pages Posted: 29 Aug 2007  

Paola Sapienza

Northwestern University - Kellogg School of Management - Department of Finance; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Anna Toldra

Universidad Carlos III de Madrid

Luigi Zingales

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 5 versions of this paper

Date Written: August 2007

Abstract

Several papers study the effect of trust by using the answer to the World Values Survey (WVS) question "Generally speaking, would you say that most people can be trusted or that you can't be too careful in dealing with people?" to measure the level of trust. Glaeser et al. (2000) question the validity of this measure by showing that it is not correlated with senders' behavior in the standard trust game, but only with his trustworthiness. By using a large sample of German households, Fehr et al. (2003) find the opposite result: WVS-like measures of trust are correlated with the sender's behavior, but not with its trustworthiness. In this paper we resolve this puzzle by recognizing that trust has two components: a belief-based one and a preference based one. While the sender behavior's reflects both, we show that WVS-like measures capture mostly the belief-based component, while questions on past trusting behavior are better at capturing the preference component of trust.

Keywords: trustworthiness, trust game, trust

JEL Classification: G10, G30, Z10

Suggested Citation

Sapienza, Paola and Toldra, Anna and Zingales, Luigi, Understanding Trust (August 2007). Available at SSRN: https://ssrn.com/abstract=1008943 or http://dx.doi.org/10.2139/ssrn.1008943

Paola Sapienza

Northwestern University - Kellogg School of Management - Department of Finance ( email )

Evanston, IL 60208
United States
847-491-7436 (Phone)
847-491-5719 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

Anna Toldra

Universidad Carlos III de Madrid ( email )

Calle Madrid 126
28903 Getafe
Spain

Luigi Zingales (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-3196 (Phone)
773-834-2081 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

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