Trust and risk revisited

Kim Fairley; Alan Sanfey; Jana Vyrastekova; Utz Weitzel

doi:10.1016/j.joep.2016.10.001

Trust and risk revisited

Kim Fairley^*, Alan Sanfey, Jana Vyrastekova, Utz Weitzel

^*Corresponding author for this work

Research output: Contribution to journal › Article › Academic › peer-review

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.

Original language	English
Pages (from-to)	74-85
Number of pages	12
Journal	Journal of Economic Psychology
Volume	57
DOIs	https://doi.org/10.1016/j.joep.2016.10.001
Publication status	Published - 1 Dec 2016

Keywords

Decision making under uncertainty
Risk
Sources of uncertainty
Trust
Trust game

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10.1016/j.joep.2016.10.001

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AB - 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.

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Trust and risk revisited

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Keywords

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