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Induced heterogeneity in trust experiments

Published online by Cambridge University Press:  14 March 2025

Lisa R. Anderson ,
Jennifer M. Mellor  and
Jeffrey Milyo
Lisa R. Anderson*
Affiliation:
Department of Economics, College of William and Mary
Jennifer M. Mellor*
Affiliation:
Department of Economics, College of William and Mary
Jeffrey Milyo*
Affiliation:
Department of Economics and Truman School of Public Affairs, University of Missouri
*
e-mail: [email protected]
e-mail: [email protected]
e-mail: [email protected]
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Abstract

Several non-experimental studies claim that heterogeneity among individuals reduces trust. A few experimental studies have examined the effects of naturally-occurring differences among subjects on trusting behavior, and in contrast, most have not supported these claims. We adopt a novel approach by inducing heterogeneity among subjects in a canonical trust experiment. We accomplish this by varying the show-up payments given to subjects for participating in the experiment. We find that this induced inequality does not consistently affect first- or second-mover behavior in the classic trust game in the manner predicted by either previous theoretical work or empirical studies of survey-based measures of trust. Further, the effect of inequality on trust, in terms of both sign and significance, depends on whether show-up payments are awarded publicly or privately.

Keywords

TrustSocial capitalInequalityExperiment

JEL classification

C9: Design of Experiments Z13: Economic Sociology • Economic Anthropology • Language • Social and Economic Stratification
Type
Research Article
Information
Experimental Economics , Volume 9 , Issue 3: Special Issue: Behavioral Economics , September 2006 , pp. 223 - 235
Copyright
Copyright © 2006 Economic Science Association

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