Trust and risk revisited
Publication date
2016-12-01
Authors
Fairley, Kim
Sanfey, Alan
Vyrastekova, Jana
Weitzel, Utz
Editors
Advisors
Supervisors
Document Type
Article
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Abstract
A trustor faces a risky choice in the trust game when he acts upon his belief regarding the chances of betrayal by the trustee. Despite intensive research there is no clear evidence for a link between lottery risk preferences and risk involved in trusting others. We argue that this is due to crucial differences between the risk measurements in the two settings. Trusting is giving up control to a human while lottery risk arises from a mechanistic randomization device. We propose a risky trust game that experimentally measures risk in the same context as the standard trust game, but nevertheless reduces the trust decision to objective risk. Our results show that transfers in the trust game can indeed be explained by individual risk attitudes elicited with the risky trust game, while lottery risk preferences have no explanatory power.
Keywords
Decision making under uncertainty, Risk, Sources of uncertainty, Trust, Trust game, Taverne, Applied Psychology, Sociology and Political Science, Economics and Econometrics
Citation
Fairley, K, Sanfey, A, Vyrastekova, J & Weitzel, U 2016, 'Trust and risk revisited', Journal of Economic Psychology, vol. 57, pp. 74-85. https://doi.org/10.1016/j.joep.2016.10.001