'Confidentially Yours': Restricting Information Flow between Trustees Enhances Trust-Dependent Transactions
39 Pages Posted: 2 Mar 2006
Date Written: November 29, 2006
By extending the traditional trust game to settings involving more than one trustee, we study how restricting information flow between trustees influences trust and reciprocity. We start with a theoretical investigation and then report the results of two experiments designed to examine investor strategy and trustee behavior. Our results suggest that, compared with when information flow is unrestricted, restricting information flow between trustees leads to the following consequences: (a) total investment is larger, (b) the number of trustees receiving non-zero investment is about the same, and (c) the investor sends out a larger variety of invested amounts to different trustees.
Keywords: Trust, trust and reciprocity, information flow, trust game, multi-person game
JEL Classification: C72, C92, D63, Z13
Suggested Citation: Suggested Citation