The Role of Social Esteem in the Trust Game With Preemptive Signaling

11 Pages Posted: 19 Jun 2023 Last revised: 3 Jul 2023

See all articles by Béatrice Boulu-Reshef

Béatrice Boulu-Reshef

Université d'Orléans

Graciela Kuechle

Heilbronn University of Applied Sciences

Date Written: June 12, 2023

Abstract

Principal-agent interactions in which the agent can preemptively signal prosociality can achieve higher levels of trust and reciprocity if both parties care about social esteem (Boulu-Reshef and Kuechle, 2023). However, it is unclear to what extent social esteem is necessary for this outcome. In this paper, we consider three versions of the trust game and show that, in the absence of social esteem, a separating equilibrium requires that players attach more importance to other players' payoffs than to their own payoffs, which is neither theoretically nor empirically sound. Furthermore, in the absence of social esteem, the separating equilibrium breaks down even when players are extremely altruistic, unless the signals available to the agent are very costly.

Keywords: Trust, Trustworthiness, Trust game, Signaling, Social esteem

JEL Classification: D01, D64 D82

Suggested Citation

Boulu-Reshef, Béatrice and Kuechle, Graciela, The Role of Social Esteem in the Trust Game With Preemptive Signaling (June 12, 2023). Available at SSRN: https://ssrn.com/abstract=4477477 or http://dx.doi.org/10.2139/ssrn.4477477

Béatrice Boulu-Reshef

Université d'Orléans ( email )

Rue de Blois
Orléans, 45000
France

HOME PAGE: http://www.beatrice-boulu-reshef.info/

Graciela Kuechle (Contact Author)

Heilbronn University of Applied Sciences ( email )

Max-Planck-Str. 39
Heilbronn, BW 74081
Germany

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