Mathew D. McCubbins and Nicholas Weller (University of Southern California – Marshall School of Business, Gould School of Law and the Department of Political Science and University of Southern California – Department of Political Science) have posted Trusting Beliefs: Understanding Beliefs and Behavior in a Trust Game on SSRN. Here is the abstract:
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Trust is an important aspect of successful political, economic and legal outcomes and can be influenced by the institutional environment in which people interact. A critical factor in whether people trust others is whether they believe the other person will reciprocate the trust. In this paper we utilize an experimental approach to study both people’s behavior in a trust game and their related beliefs. We find that in a standard trust game many people expect to benefit financially from passing money in the trust game. Subjects in the experiment are relatively good at predicting the behavior of others, often by using their own behavior as a guide. Overall, players’ beliefs and actions rarely match game theoretic expectations. By looking at both beliefs and behavior we are able to understand better the different reasons why people engage in trusting behavior. This is crucial, because to design institutions that facilitate trust requires understanding individuals’ beliefs and how institutions can change those beliefs. By focusing on identifying beliefs we hope to better understand the conditions under which institutions will generate trusting behavior.
Highly recommended.