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.
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Anderson, L.R., Mellor, J.M. & Milyo, J. Induced heterogeneity in trust experiments. Exp Econ 9, 223–235 (2006). https://doi.org/10.1007/s10683-006-9124-2
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DOI: https://doi.org/10.1007/s10683-006-9124-2