Three-Player Trust Game with Insider Communication

Economic Inquiry, Forthcoming

46 Pages Posted: 28 Dec 2012

See all articles by Roman M. Sheremeta

Roman M. Sheremeta

Case Western Reserve University

Jingjing Zhang

University of Zurich - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: December 27, 2012

Abstract

We examine behavior in a three-player trust game in which the first player may invest in the second and the second may invest in the third. Any amount sent from one player to the next is tripled. The third player decides the final allocation among three players. The baseline treatment with no communication shows that the first and second players send significant amounts and the third player reciprocates. Allowing insider communication between the second and the third players increases cooperation between these two. Interestingly, there is an external effect of insider communication: the first player who is outside communication sends 54% more and receives 289% more than in the baseline treatment. As a result, insider communication increases efficiency from 44% to 68%.

Keywords: three-player trust games, experiments, reciprocity, communication

JEL Classification: C72, C91, D72

Suggested Citation

Sheremeta, Roman M. and Zhang, Jingjing, Three-Player Trust Game with Insider Communication (December 27, 2012). Economic Inquiry, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2194147

Roman M. Sheremeta

Case Western Reserve University ( email )

10900 Euclid Ave.
Cleveland, OH 44106
United States

Jingjing Zhang (Contact Author)

University of Zurich - Department of Economics ( email )

Blümlisalpstrasse 10
Zurich, 8006
Switzerland

HOME PAGE: http://www.econ.uzh.ch/faculty/zhang.html

Register to save articles to
your library

Register

Paper statistics

Downloads
107
Abstract Views
544
rank
251,719
PlumX Metrics