Trust and Trustworthiness Under the Prospect Theory: A Field Experiment in Vietnam

61 Pages Posted: 12 Sep 2012 Last revised: 14 Sep 2012

See all articles by Quang Nguyen

Quang Nguyen

Nanyang Technological University (NTU)

Marie Claire Villeval

Groupe d'Analyse et de Théorie Economique (GATE), CNRS; IZA Institute of Labor Economics; Global Labor Organization (GLO)

Hui Xu

University of Lyon 2 - Groupe d'Analyse et de Théorie Economique (GATE)

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Date Written: September 1, 2012

Abstract

We study the influence of risk and time preferences on trust and trustworthiness by conducting a field experiment in Vietnamese villages and by estimating the parameters of the Cumulative Prospect Theory and of quasi-hyperbolic time preferences. We find that while probability sensitivity or risk aversion do not affect trust, loss aversion influences trust indirectly by lowering the expectations of return. Also, more risk averse and less present biased participants are found to be trustworthier. The experience of receiving remittances influences behavior and a longer exposure to a collectivist economy tend to reduce trust and trustworthiness.

Keywords: trust, trustworthiness, risk preferences, time preferences, cumulative prospect theory, Vietnam, field experiment

JEL Classification: C91, C93, D81, D90, O010, O053

Suggested Citation

Nguyen, Quang and Villeval, Marie Claire and Xu, Hui, Trust and Trustworthiness Under the Prospect Theory: A Field Experiment in Vietnam (September 1, 2012). Available at SSRN: https://ssrn.com/abstract=2144628 or http://dx.doi.org/10.2139/ssrn.2144628

Quang Nguyen (Contact Author)

Nanyang Technological University (NTU) ( email )

S3 B2-A28 Nanyang Avenue
Singapore, 639798
Singapore

Marie Claire Villeval

Groupe d'Analyse et de Théorie Economique (GATE), CNRS ( email )

93, chemin des Mouilles
Ecully, 69130
France
+33 472 86 60 79 (Phone)
+33 472 86 60 90 (Fax)

HOME PAGE: http://www.gate.cnrs.fr/equipe/perso/villeval/villeval.html

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Global Labor Organization (GLO) ( email )

Collogne
Germany

Hui Xu

University of Lyon 2 - Groupe d'Analyse et de Théorie Economique (GATE) ( email )

93, chemin des Mouilles
Ecully, 69130
France

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