Disentangling Trust from Risk-Taking: Triadic Approach

Abstract

The willingness to trust human receivers is compared to the inclination to take lottery risk in six distinct scenarios, controlling the return distributions. Trust shows significantly smaller responsiveness to return expectations compared to parallel pure-risk lottery allocation, and paired comparisons reveal that investors sacrifice 5% of the expected payoff to trust anonymous receivers. Trust is more calculated and volatile for males, while appearing relative stable for females. The results complement the accumulating evidence regarding physiological differences between trust and risk, in addition suggesting that the trust-risk differences are stronger for females.

Keywords: Trust, risk, gender, ambiguity, betrayal aversion

JEL Classification: C72, C90, D80