Trust and the Reference Point for Trustworthiness in Gulf and Western Countries

24 Pages Posted: 24 Jun 2009

See all articles by Iris Bohnet

Iris Bohnet

Harvard University - Harvard Kennedy School (HKS)

Benedikt Herrmann

University of Nottingham - School of Economics

Richard J. Zeckhauser

Harvard University - Harvard Kennedy School (HKS); National Bureau of Economic Research (NBER)

Date Written: June 22, 2009

Abstract

Why is private investment so low in Gulf compared to Western countries? We investigate cross-regional differences in trust and reference points for trustworthiness as possible factors. Experiments controlling for cross-regional differences in institutions and beliefs about trustworthiness reveal that Gulf citizens pay much more than Westerners to avoid trusting, and hardly respond when returns to trusting change. These differences can be explained by subjects’ gain/loss utility relative to their region’s reference point for trustworthiness. The relation-based production of trust in the Gulf induces higher levels of trustworthiness, albeit within groups, than the rule-based interactions prevalent in the West.

Keywords: microeconomics, conflict management

Suggested Citation

Bohnet, Iris and Herrmann, Benedikt and Zeckhauser, Richard J., Trust and the Reference Point for Trustworthiness in Gulf and Western Countries (June 22, 2009). HKS Working Paper No. RWP09_015, Available at SSRN: https://ssrn.com/abstract=1424053 or http://dx.doi.org/10.2139/ssrn.1424053

Iris Bohnet (Contact Author)

Harvard University - Harvard Kennedy School (HKS) ( email )

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Benedikt Herrmann

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom

Richard J. Zeckhauser

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States
617-495-1174 (Phone)
617-384-9340 (Fax)

National Bureau of Economic Research (NBER) ( email )

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Cambridge, MA 02138
United States
617-495-1174 (Phone)
617-496-3783 (Fax)

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