Trust under Request versus Trust with Threats
40 Pages Posted: 6 May 2022 Last revised: 1 Feb 2024
There are 2 versions of this paper
Trust under Request versus Trust with Threats
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: Suggested Citation