Trust Reciprocity and Interpersonal History: Fool Me Once Shame on You Fool Me Twice Shame on Me

Posted: 27 Feb 1998

See all articles by John W. Dickhaut

John W. Dickhaut

Chapman University (Deceased)

John Hubbard

Macalester College

Kevin McCabe

University of Minnesota - Twin Cities - Carlson School of Management

Abstract

In the investment game subjects in room A decide how much of their $10 show up fee to invest with an anonymous counterpart in room B. Each dollar is known to triple by the time it reached room B. Subjects in room B then decide how much of the tripled money they received to keep and how much to pay back. Subgame perfection predicts that room B subjects will send back zero thus room A subjects should invest zero. Previous studies with sixty pairs of subjects demonstrate the existence of trust i.e. room A subjects invest over $5 on average and reciprocity i.e. room B subjects often send back more than was invested.

JEL Classification: L14, M41

Suggested Citation

Dickhaut, John and Hubbard, John and McCabe, Kevin, Trust Reciprocity and Interpersonal History: Fool Me Once Shame on You Fool Me Twice Shame on Me. Available at SSRN: https://ssrn.com/abstract=55450

John Dickhaut

Chapman University (Deceased)

John Hubbard

Macalester College

1600 Grand Avenue
St. Paul, MN 55105
United States

Kevin McCabe (Contact Author)

University of Minnesota - Twin Cities - Carlson School of Management ( email )

321 19th Avenue South
669 Management and Economics
Minneapolis, MN 55455
United States
612-624-9393 (Phone)
612-626-7795 (Fax)

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