Repeated Interactions vs. Social Ties: Quantifying the Economic Value of Trust, Forgiveness, and Reputation Using a Field Experiment

60 Pages Posted: 9 Oct 2014 Last revised: 14 Aug 2018

See all articles by Ravi Bapna

Ravi Bapna

University of Minnesota - Minneapolis

Liangfei Qiu

University of Florida - Warrington College of Business Administration

Sarah C. Rice

Texas A&M University - Mays Business School

Date Written: September 28, 2016

Abstract

The growing importance of online social networks provides fertile ground for researchers seeking to gain a deeper understanding of fundamental constructs of human behavior, such as trust, forgiveness, and their linkage to social ties. Through a field experiment that uses data from the Facebook API to measure social ties that connect our subjects, we separate forward-looking instrumental trust from static intrinsic trust and show that the level of instrumental trust and forgiveness, and the effect of forgiveness on deterring future defections, crucially depend on the strength of social ties. We find that the level of trust under social repeated play is greater than the level of trust under anonymous repeated play, which in turn is greater than the level of trust under anonymous one shot games. We also uncover forgiveness as a key mechanism that facilitates the cooperative equilibrium being more stable in the presence of social ties: If the trading partners are socially connected, the equilibrium is more likely to return to the original cooperative one after small disturbances.

Keywords: Trust, Forgiveness, Social Ties, Repeated Games

Suggested Citation

Bapna, Ravi and Qiu, Liangfei and Rice, Sarah C., Repeated Interactions vs. Social Ties: Quantifying the Economic Value of Trust, Forgiveness, and Reputation Using a Field Experiment (September 28, 2016). Forthcoming, MIS Quarterly; NET Institute Working Paper No. 14-07; Mays Business School Research Paper No. 2506203. Available at SSRN: https://ssrn.com/abstract=2506203 or http://dx.doi.org/10.2139/ssrn.2506203

Ravi Bapna (Contact Author)

University of Minnesota - Minneapolis ( email )

321 19th Ave S
Information and Decision Sciences
Minneapolis, MN 55455
United States

Liangfei Qiu

University of Florida - Warrington College of Business Administration ( email )

Gainesville, FL 32611
United States

HOME PAGE: http://sites.google.com/site/qiuliangfei/

Sarah C. Rice

Texas A&M University - Mays Business School ( email )

Wehner 401Q, MS 4353
College Station, TX 77843-4218
United States

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