Trust, Risk and Betrayal
29 Pages Posted: 17 Dec 2003
Date Written: October 6, 2003
Using experiments, we examine whether the decision to trust a stranger in a one-shot interaction is equivalent to taking a risky bet, or if a trust decision entails an additional risk premium to balance the costs of trust betrayal. We compare a binary-choice Trust game with a structurally identical, binary-choice Risky Dictator game with good or bad outcomes. We elicit individuals' minimum acceptable probabilities (MAPs) of getting the good outcome such that they would prefer the chance to the sure payoff. First movers state higher MAPs in the Trust game than in situations where nature determines the outcome.
Keywords: Advocacy and persuasion, economics, econometric theory, ethics, political philosophy, law and legal Institutions, leadership, conflict management
JEL Classification: D74, D81
Suggested Citation: Suggested Citation