Beliefs and Trust: An Experiment
CentER Discussion Paper No. 2005-88
24 Pages Posted: 15 Sep 2005
Date Written: August 2005
In this paper, we address the concept of trust by combining (i) the self-reported trust and belief in trustworthiness of others from a general unpaid questionnaire, (ii) choices made in a social valuation task designed to measure subjects' distributional preferences, (iii) strategies submitted in the trust game in both roles of the game, and (iv) subjects' beliefs about the strategies of their co-player submitted in the form of probability distributions and incentivized by the quadratic scoring rule. We show that trust can be expressed as a belief in positive reciprocity of the trustee, and answers to general questionnaire lack predictive power. Distributional preferences also play a role in the decision to trust in that they affect the subjects' beliefs about the positive reciprocity of others. Cooperative subjects are more optimistic in their beliefs and therefore trust more.
Keywords: experimental economics, trust, beliefs, distributional preferences
JEL Classification: C72, C91
Suggested Citation: Suggested Citation