Building Trust One Gift at a Time

18 Pages Posted: 17 Jun 2009 Last revised: 23 Feb 2011

See all articles by Maroš Servátka

Maroš Servátka

Macquarie Graduate School of Management - MGSM Experimental Economics Laboratory

Steven James Tucker

University of Waikato Management School - Economics

Radovan Vadovic

Carleton University

Date Written: October 21, 2010

Abstract

This paper reports an experiment evaluating the effect of gift giving on building trust in a relationship. We have nested our explorations in the standard version of the investment game. Our gift treatment includes a dictator stage in which the trustee decides whether to give a gift to the trustor before both of them proceed to play the investment game. We observe that in such case the majority of trustees offer their endowment to trustors. Consequently, receiving a gift significantly increases the amounts sent by trustors when controlling for the differences in payoffs created by it. Trustees are, however, not better off by giving a gift as the increase in the amount sent by trustors is not large enough to offset the trustees’ loss associated with the cost of giving a gift. Our results indicate that a relationship which is initiated by gift giving leads to higher trust and efficiency but at the same time is probably not stable.

Keywords: Experimental economics, gift giving, investment game, trust, trustworthiness

JEL Classification: C70, C91

Suggested Citation

Servátka, Maroš and Tucker, Steven James and Vadovic, Radovan, Building Trust One Gift at a Time (October 21, 2010). Available at SSRN: https://ssrn.com/abstract=1421009 or http://dx.doi.org/10.2139/ssrn.1421009

Maroš Servátka (Contact Author)

Macquarie Graduate School of Management - MGSM Experimental Economics Laboratory ( email )

Sydney
Australia

Steven James Tucker

University of Waikato Management School - Economics ( email )

Hamilton
New Zealand

Radovan Vadovic

Carleton University ( email )

1125 Colonel By Drive
Ottawa, Ontario K1S 5B6
Canada

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