Trust under Financial Distress - An Experimental Study
A new version is accepted for publication at Journal of Behavioral and Experimental Economics with title 'Does Trust Break Even? A Trust-Game Experiment with Negative Endowments'
Posted: 24 Nov 2021 Last revised: 17 Jan 2023
Date Written: November 24, 2021
The experimental literature on trust game experiments is quite extensive. Those studies consider situations in which trustors and trustees starting with a positive endowment might become even wealthier when Trust and Trustworthiness pay off. We contrast such a situation with a treatment in which subjects start under financial distress such that only Trust and Trustworthiness can help them escape a financial loss. We find higher Trust in such an environment in comparison to the established design. We find no severe difference in Trustworthiness.
Keywords: Trust Game, Investment Game, Experiment, Loss, Reciprocity
JEL Classification: C72, C91
Suggested Citation: Suggested Citation