Trust, Inequality and the Market

Hargreaves Heap, Shaun P.; Tan, Jonathan H. W.; Zizzo, Daniel John

doi:10.2139/ssrn.1374844

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Trust, Inequality and the Market

31 Pages Posted: 9 Apr 2009

See all articles by Shaun P. Hargreaves Heap

Shaun P. Hargreaves Heap

University of East Anglia (UEA) - School of Economic and Social Studies

Daniel John Zizzo

University of Queensland - School of Economics

Date Written: April 1, 2009

Abstract

We present an experimental investigation of how inequality affects trust and trustworthiness in non market and in market settings. We consider three experimental treatments, one with inequality, one with inequality but no knowledge of the income of other agents, and one with inequality and knowledge. Inequality, particularly when it is known, has a corrosive effect on trusting behaviors in this experiment. Agents appear to be less sensitive to known income differentials in markets than they are in the non market settings, but trust in markets appears generally more vulnerable to the introduction of inequality than in non market settings.

Keywords: trust, income inequality, market, social capital

JEL Classification: C72, C91, Z13

Suggested Citation: Suggested Citation

Hargreaves Heap, Shaun and Tan, Jonathan H. W. and Zizzo, Daniel John, Trust, Inequality and the Market (April 1, 2009). Available at SSRN: https://ssrn.com/abstract=1374844 or http://dx.doi.org/10.2139/ssrn.1374844