Traditional Trust Measurement and the Risk Confound: An Experiment in Rural Paraguay

40 Pages Posted: 6 May 2005

See all articles by Laura Schechter

Laura Schechter

University of Wisconsin at Madison - Agricultural and Applied Economics; University of Wisconsin at Madison - Economics

Abstract

Play in the traditional trust experiment depends both on trust beliefs and on levels of risk aversion. We ran two experiments with a diverse set of subjects in fifteen villages of rural Paraguay, the traditional trust experiment and a new experiment measuring only risk aversion. We find that risk attitudes are highly predictive of play in the trust game. In addition, omitting risk aversion as a regressor in trust regressions significantly changes the coefficients of important explanatory variables such as gender and wealth.

Keywords: Paraguay, trust, risk aversion, experiment

JEL Classification: C90, C93, D81, O10

Suggested Citation

Schechter, Laura, Traditional Trust Measurement and the Risk Confound: An Experiment in Rural Paraguay. Available at SSRN: https://ssrn.com/abstract=718061

Laura Schechter (Contact Author)

University of Wisconsin at Madison - Agricultural and Applied Economics ( email )

427 Lorch St.
Madison, WI 53706-1503
United States

HOME PAGE: http://aae.wisc.edu/lschechter

University of Wisconsin at Madison - Economics ( email )

William H. Sewell Social Science Building
1180 Observatory Drive
Madison, WI 53706-1393
United States

HOME PAGE: http://aae.wisc.edu/lschechter

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