Trust under Request versus Trust with Threats

40 Pages Posted: 6 May 2022 Last revised: 1 Feb 2024

See all articles by Yunwen He

Yunwen He

Central University of Finance and Economics (CUFE)

Bin Xu

School of Economics, Zhejiang Gongshang University

Jie Zheng

Shandong University - Center for Economic Research

Multiple version iconThere are 2 versions of this paper

Date Written: July 25, 2023

Abstract

Trust and trustworthiness are important in interpersonal relations. Departure from the standard investment game, we examine the effect of a request mechanism and that of a threat mechanism upon trustor and trustee’s behavior, both theoretically and experimentally. By allowing the trustee to ex ante send a requesting message, the request mechanism is capable of elevating the overall trust level and exerting a short-term Request-fulfilling effect. In contrast, by providing the trustor a threatening opportunity to ex post destroy the payoffs from the investment, the threat mechanism leads to the increase of trust and trustworthiness to a higher level while exhibiting significant long-term high performance. Furthermore, the above-mentioned two mechanisms achieve similar positive results regarding efficiency, whereas a higher level of trade fairness is achieved with a threat. It is noteworthy that this threat does not promote higher efficiency than the request due to the Payoff-destructing effect arising from threat implementation.

Keywords: Trust, Reciprocity, Request, Threat

JEL Classification: C72, C91, D91

Suggested Citation

He, Yunwen and Xu, Bin and Zheng, Jie, Trust under Request versus Trust with Threats (July 25, 2023). Available at SSRN: https://ssrn.com/abstract=4099357 or http://dx.doi.org/10.2139/ssrn.4099357

Yunwen He (Contact Author)

Central University of Finance and Economics (CUFE) ( email )

39 South College Road
Haidian District
Beijing, Beijing 100081
China

Bin Xu

School of Economics, Zhejiang Gongshang University ( email )

18 Xuezheng Street, Hangzhou
Hangzhou, Zhejiang 310018
China
15888897050 (Phone)

Jie Zheng

Shandong University - Center for Economic Research ( email )

Jinan, Shandong 250100
China

HOME PAGE: http://https://meetecon.com/jie/

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