The Interplay of Inequality and Reference Dependence with Trust an Experimental Study
7 Pages Posted: 11 Apr 2016
Date Written: April 2016
Using a canonical trust game, we investigate whether the inequality of endowment between trustor and trustee and the acquired versus permanent financial state affect trust and trustworthiness. We found that trust and trustworthiness are reference‐dependent and that individuals with permanent financial state receive more trust and are more trustworthy than others. In our experiment, unequal endowments do not significantly affect trust, but trustworthiness increases significantly when the trustor is poorer.
Keywords: experiment, inequality, reference‐dependence, trust, trustworthiness
JEL Classification: C91
Suggested Citation: Suggested Citation