Trust is the foundation on which every business relationship is built. Yet the reasons why we should trust a person are not always transparent. To answer this question, we need to first understand what drives someone to repay the trust that we put in him. Many theories try to explain those motivations, with inequity and guilt aversion among the most prominent. With this work, I aim to identify the main driver of trustworthiness. This paper tests which preference is more relevant in predicting pro-social behaviour in a trust game through a theory-driven experiment. The results suggest that the inequity aversion model is more relevant in explaining pro-social behaviour.
This paper studies how intergroup competition affects cooperation. In the control condition, pairs of subjects play an indefinitely repeated Prisoner’s Dilemma game without external competition. In the treatment, two pairs compete against each other. No monetary rewards are tied to winning, isolating the bare impact of competition. In the treatment, cooperation increases by 16 percentage points. Strategies estimation shows a shift from selfish strategies (Always Defect) to cooperative ones (Grim Trigger). A theoretical model provides a rationale for the experimental results.
Can the mere presence of non-interactive observers motivate prosocial behavior? Are audience effects monotonic in the number of onlookers? The empirical literature provides mixed findings on these questions. We address them through clean experimental evidence from a modified dictator game involving an external, non-interactive audience of variable size and a charity receiver. Our experimental design is based on a theoretical framework for size-dependent image concerns that lends itself to natural extensions across various social contexts where actions can be interpreted as signals over private traits. The simplicity of our design allows us to isolate audience effects from the confounding features of experimental designs. We find that the presence of an audience increases donations by 24%, with every audience member increasing donations by an estimated average of 5%.