Strategic Trustworthiness via Non-Strategic Third-Party Reward – An Experiment

38 Pages Posted: 14 Jun 2014 Last revised: 21 Jan 2017

See all articles by Lilia Zhurakhovska

Lilia Zhurakhovska

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods; University of Duisburg-Essen

Date Written: January 2017

Abstract

In modern societies more and more people interact with strangers in one-shot situations. In these situations it might be difficult to trust others. Yet, trust is an essential component of most economic interactions. In this paper (in a one-shot situation) an impartial third party can reward another stranger for being trustworthy towards another unrelated person. By design the reward is costly and cannot be strategically motivated. Subjects strategically increase their trustworthiness towards others if they can anticipate to be rewarded for such behavior by an impartial third party. Impartial third parties reward trustworthiness irrespective of whether it can be anticipated.

Keywords: strong indirect reciprocity, third-party reward, trust game, norms, experiment

JEL Classification: C09, D03, D63

Suggested Citation

Zhurakhovska, Lilia, Strategic Trustworthiness via Non-Strategic Third-Party Reward – An Experiment (January 2017). MPI Collective Goods Preprint, No. 2014/6. Available at SSRN: https://ssrn.com/abstract=2449286 or http://dx.doi.org/10.2139/ssrn.2449286

Lilia Zhurakhovska (Contact Author)

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
Bonn, 53113
Germany

University of Duisburg-Essen ( email )

Lotharstrasse 1
Duisburg, 47048
Germany

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