TRUST,RECIPROCITY, AND RULES

Many economic interactions rely on trust and trust violations can have serious economic consequences. Simple minimum standard rules are attractive because they prevent egregious trust violations. However, they may undermine more trusting and reciprocal (trustworthy) behavior that otherwise would have occurred, leading to worse outcomes. In an experimental trust game, we test the efficacy of exogenously imposed minimum standard rules. Rules damage trust and reciprocity, reducing economic welfare. While sufficiently restrictive rules restore welfare, trust and reciprocity never return. Results indicate that participants are concerned about payoffs while also using the game to learn about trust and trustworthiness of others. (JEL C72, C90, D63, D64, L51)     

What’s in a frame? Goal framing,trust and reciprocity

Economists often rely on the Berg et al. (1995) trust game, or variants thereof, to identify levels of trust and reciprocity, which are fundamental to discussions of social capital. But to what extent is behavior in this game sensitive to the way the instructions are framed? We use the Berg et al. trust game played for ten rounds with random re-matching to study this. We implement a number of variations in the way the game is presented to subjects. We show that levels of trust, reciprocity and returns to trust are significantly higher under “goal framing”, which highlights the conflict inherent in the game, between self-interest and maximizing social surplus. Furthermore, with such framing, trust measured via the experimental game exhibits significant positive correlation with trust measured via the Social Values Orientation questionnaire.     

IS THERE RECIPROCITY IN A RECIPROCAL‐EXCHANGE ECONOMY? EVIDENCE OF GENDERED NORMS FROM A SLUM IN NAIROBI,KENYA

Norms of reciprocity help enforce cooperative agreements in bilateral sequential exchange. We examine the norms that apply in a reciprocal-exchange economy. In our one-shot investment game in a Nairobi slum, people adhered to the norm of "balanced reciprocity," which obligates quid-pro-quo returns for any level of trust. The norm is gendered, with people more likely to comply when confronted with women rather than men, and differs from "conditional reciprocity," prevalent in developed countries, according to which greater trust is rewarded with proportionally larger returns. Balanced reciprocity produces less trust and trustworthiness and smaller gains from trade than conditional reciprocity. ( JEL C72, C91)     

Deterministic versus probabilistic consequences of trust and trustworthiness: An experimental investigation

There is overwhelming evidence of reciprocal behavior, driven by intentions. However, the role of consequences is less clear cut. Experimentally manipulating how efficient trust and reciprocity can be in deterministic and uncertain environments allows us to study how payoff consequences of trust and trustworthiness affect reciprocity. According to the results for our modified Investment Game, trustees reward trust more when trust is more efficient but do not adjust rewards when the efficiency of rewarding is varied. Furthermore, higher deterministic benefits result in higher levels of reciprocity for all trust levels, whereas an uncertain environment diminishes reciprocity.     

DISINHERITANCE AND WILL CONTESTS AS RECIPROCITY AND DEVIANCE: An Empirical Extension of Gouldner and Rosenfeld Based on the Wills of Providence, 1985

Traditional content analysis of the 319 last wills probated in Providence, RI, 1985, was used to test eight of Rosenfeld's empirical generalizations about the social characteristics of disinheritances and will contests and his explanation of them in terms of Gouldner's concept of the norm of reciprocity. Many of Rosenfeld's generalizations are applicable to the Providence data, although disinheritance might be "drifting down" into the middle and lower classes and seems to take at least five forms: positive reciprocity, negative reciprocity, positive deviance, negative deviance, and wastage avoidance. Disinheritance might become much more frequent but also multiform, sophisticated, consequential, and controversial in the decades ahead.     

Reciprocal relationships in tax compliance decisions

Reciprocity considerations are important to the tax compliance problem as they may explain the global dynamics of tax evasion, beyond individual tax evasion decisions, toward a downward or upward spiral. To provide evidence on reciprocity in tax compliance decisions, we have conducted a laboratory experiment in which we introduced two types of inequities. The first type of inequity is called vertical, because it refers to inequities introduced by the government when it sets different fiscal parameters for identical taxpayers, while the second type of inequity is called horizontal because it refers to the fact that taxpayers may differ in tax compliance decisions. In this setting, taxpayers may react to a disadvantageous or advantageous inequity through negative or positive reciprocal behaviors, respectively. Our results support the existence of negative and positive reciprocity in both vertical and horizontal cases. When both inequities come into play and may induce reciprocal behaviors in opposite directions, the horizontal always dominates the vertical.     

Trust in humans and robots: Economically similar but emotionally different

Trust-based interactions with robots are increasingly common in the marketplace, workplace, on the road, and in the home. However, a valid concern is that people may not trust robots as they do humans. While trust in fellow humans has been studied extensively, little is known about how people extend trust to robots. Here we compare trust-based investments and self-reported emotions from across three nearly identical economic games: human-human trust games, human-robot trust games, and human-robot trust games where the robot decision impacts another human. Robots in our experiment mimic humans: they are programmed to make reciprocity decisions based on previously observed behaviors by humans in analogous situations. We find that people invest similarly in humans and robots. By contrast the social emotions (i.e., gratitude, anger, pride, guilt) elicited by the interactions (but not the non-social emotions) differed across human and robot trust games. Emotional reactions depended on the trust game interaction, and how another person was affected.     

It's not who you know,it's how you know them: Who exchanges what with whom?

Reciprocity – doing for others if they have done for you – is a key way people mobilize resources to deal with daily life and seize opportunities. In principle, reciprocity (the Golden Rule) is a universal norm. In practice, it is variable. Personal networks rarely operate as solidarities and as such, people cannot count on all the members of their networks to provide help all the time. Rather, social support comes uncertainly from a variety of ties in networks. This paper uses survey research to understand the variable and contingent nature of reciprocity and inquires about the kinds of resources exchanged between people. We investigate the extent to which interpersonal ties, network characteristics, and people's personal characteristics (e.g., gender) affect the nature of reciprocal relationships. The evidence is extraordinarily clear on one subject – giving support is strongly associated with getting it. Analyses show that getting support from network members is the key to East Yorkers reciprocating – usually in kind but sometimes with other forms of support.     

SOCIAL CAPITAL AND DEMOCRACY IN A NEW DEMOCRACY

Taiwan made the transition from political authoritarianism to democracy in the late 1980s. Data from representative samples of the Taiwan population in 1992 and 1997 show how, in the early phase of democratization, citizens varied in the extent of their democratic political behavior and attitudes. I attempt to explain these variations on the basis of variables drawn from social capital theory (participation in voluntary organizations and trust), controlling for the individual's position in the social structure (sex, age, ethnicity, marital status, socioeconomic status, and social class). The findings of the multivariate analysis support only one of the social capital hypotheses: The more organizations one participates in, the more one engages in various forms of democratic political behavior . However, organizational participation has no effect on democratic political attitudes . There is no positive reciprocal relationship between the two key social capital variables of organizational participation and trust. Trust, instead of having a positive effect, either has no net effect (on some forms of democratic political behavior) or a significant negative effect (on democratic political attitudes and petitioning a government agency). The political context of Taiwan may explain why people who distrusted Taiwan's political system were more democratic and more tolerant in their attitudes than those who had more political trust.     

Adolescents' trust and reciprocity toward friends,unknown peers,and community members

Using a newly developed version of the Trust Game among 196 adolescents aged 11–20 years, this study examined whether adolescents distinguish between trust and reciprocity to unknown peers, friends, and community members. We also tested for effects of age, gender, and individual differences in attending to others' emotions, emotional support to friends, societal contributions, and institutional and interpersonal trust beliefs. Results indicated that adolescents showed the least trust and reciprocity to unknown peers, more to a community member, and most to friends. Reciprocity increased with age, and individual differences in societal contributions and interpersonal trust were positively related to trust and reciprocity. This study was the first to show that community members are a specific target in adolescents' social world.     

REPUTATION AND EARNINGS: THE ROLES OF QUALITY AND QUANTITY IN ACADEME

We examine the determinants of professional reputation. Does quantity of exposures raise reputation independent of quality? Does quality of the most important exposure have extra effects on reputation? In a very large sample of academic economists, there is little evidence that a scholar's most influential work provides any extra enhancement of reputation. Quality rankings matter more than absolute quality. Quantity has a zero or even negative effect on proxies for reputation. Data on salaries, however, show positive effects of quantity independent of quality. We test explanations for the differences between the determinants of reputation and salary. (JEL L14, J31)     

Reciprocities in caregiving relationships in Danish elder care

This article examines the nature of the reciprocal relationships between elderly people and both their informal caregivers and home helpers in Denmark. One of the key results concerns the importance that elderly care recipients attached to various forms of reciprocity. The two major ones were hospitality and gift giving. While informal caregivers see their caregiving as normative or as generalized reciprocity, many stressed that the elderly person's personality and their expressions of gratitude and appreciation (symbolic reciprocity) were important factors facilitating caregiving. Home helpers spoke of satisfaction in helping others, but also underlined the fact that they could see some good role models for their own old age. The results are analyzed on the backdrop of the nature of the Danish welfare system, which provided liberal pensions and benefits. This indirect reciprocity enabled elderly people to retain their ability to participate in reciprocal social relations and preserve their integrity and independence.     

ON THE NATURE OF RECIPROCAL MOTIVES

Data from 692 subjects in 11 experimental treatments provide a systematic exploration of the existence and nature of reciprocal behavior in two-person games. The experimental design discriminates between motivations of reciprocity and (nonreciprocal) other-regarding preferences. The existence of positive reciprocity is found to be dependent on the level of social distance but not the level of monetary payoff. The larger context in which a decision is made is found to have a significant effect on negative reciprocity. These findings on payoff levels, social distance, decision context, and reciprocity have implications for both theoretical modeling and experimental design. (JEL C70 , C91 , D63 , D64 )     

Developmental Changes and Individual Differences in Trust and Reciprocity in Adolescence

A Trust Game was used to examine trust and reciprocity development in 12–18‐year‐old‐adolescents (N = 496), as findings have been conflicting and transitions in adolescence remain elusive. Furthermore, this study tested the roles of gender, risk, and individual differences in empathy, impulsivity, and antisocial tendencies in trust and reciprocity. Results indicate stability in trust and a decrease in reciprocity across adolescence, but also show that trust and reciprocity choices were influenced by risk, and that empathy mediated the age‐related decrease in reciprocity. Males trusted more than females, but there were no gender differences in reciprocity. These findings highlight the importance of considering individual differences and adolescents’ sensitivities to varying contexts in explaining trust and reciprocity development in adolescence.     

Does players’ identification affect trust and reciprocity in the lab?

Reputation mechanisms are mainly based on information sharing by traders about private trading experience. Each trader can therefore rely on his own past experience as a trader and on other traders’ past experience. The former is the direct component of the reputation mechanism and the latter the indirect component ( [Bolton et al., 2004a] and [Bolton et al., 2004b]). We design an experiment for isolating the direct component of the reputation system and studying its effect on the level of trust and reciprocity in a population where agents play both roles (trustor and trustee). Our experiment consists on three treatments of a finitely repeated investment game (Berg, Dickhaut, & McCabe, 1995). In the reference treatment there is no reputation mechanism at all, in treatment 1 trustees can build up a direct reputation, and in treatment two players can build up a direct reputation for both roles. We find that trustees’ direct reputation has a positive effect on reciprocity, but does not affect the average trust in the population. Trust is significantly higher only when players can build up a reputation in both roles. We show that the increase in trust is mainly linked to the formation of mutual trust-reciprocity relations.     

Social capital online: Collective use of the Internet and reciprocity as lubricants of democracy

This article puts the democratic potential of using the Internet into perspective through an analysis of how collective uses of the Internet promote social capital. Research results reveal that social capital online (i.e. trust and reciprocity) is enhanced by involvement in collective use of the Internet such as participation in online communities and use of the Internet among informal groups in everyday life. This process could counter negative aspects of Internet use. Further, accumulated online social capital can be a powerful predictor of online political participation, i.e. online reciprocity has a positive effect on intention to participate in online civic discussion. Finally, the authors' analyses indicate the possibility of a spillover of online social capital into offline arenas. It is concluded that collective use of the Internet can be a lubricant for democracy.     

Gambling,Exchange Systems,and Moralities

History and ethnography show us that, across societies of the past and present, gambling varies considerably with respect to its organization, social meanings, and how it is regarded in moral terms. This paper presents a basic scheme for analyzing the relationship between gambling and society. A theoretical starting point is that reciprocity is fundamental to social and economic systems. An anthropological theory of exchange systems makes a broad distinction between a structural dimension (generalized versus balanced reciprocity) and a normative dimension (from voluntary to involuntary). A model of four basic forms of reciprocity, each having a characteristic exchange mode and morality, can thus be constructed. Gambling is here understood as an exchange system embedded in the reciprocal orders of society and having a necessary relationship to these; it can take on the characteristics of such an order or it can be regarded as conflicting with it. Much of the variation in the form and morality of gambling therefore emerges as systematic and explainable by a theory of forms of reciprocal exchange.     

Reciprocity and Profit Sharing: Is There an Inverse U-shaped Relationship?

Free-riding potentially limits the effectiveness of profit sharing in motivating workers. While reciprocity can mitigate this problem, it need not be uniformly productive. We show that the probability of receiving profit sharing takes an inverse U-shape as detailed individual survey measures of reciprocity increase. This is consistent with moderate but not extreme reciprocity stimulating productivity. We support one potential causation path by showing that extreme positive (negative) reciprocity is associated with extremely high (low) socializing and among workers receiving profit sharing, an intermediate degree of socializing is associated with the maximum amount of paid and unpaid overtime, a productivity proxy.     

“Trust Me”: Differences in expressed and perceived trust relations in an organization

The possibility of resolving the tension between trust as a psychological condition and trust as a general organizing principle depends on assumptions about the convergence of expressed and perceived trust relations. In empirical organizational research these assumptions are frequently left implicit and only rarely modeled directly. Using data that we have collected on trust relations within the top management team of a multiunit industrial group we specify and estimate multivariate exponential random graph models (ERGMs) that reveal important differences in the structural logics underlying networks of expressed and perceived trust relations. Results confirm that trust induces awareness and produces expectations of reciprocity – features that are consistent with the view of trust as a general organizing principle. Results also show that networks of perceived trust relations are characterized by tendencies toward reciprocity and generalized giving of trust. When multivariate network effects are introduced, however, expressed trust relations no longer show a significant tendency toward reciprocation. Interpreted together these results suggest that: (i) the distribution of expressed and perceived trust relations differs; (ii) expressed trust relations in organizations are more hierarchical than are perceived trust relations, and (iii) expressed and perceived trust relations need to be modeled jointly. These findings suggest caution in the adoption and interpretation of trust only as a general organizing principle, and suggest that psychological mechanisms also play an important role in the making and breaking of trust relations within organizations.     

THE HETEROGENEITY OF IMMIGRANTS,HOST COUNTRIES' INCOME AND PRODUCTIVITY: A CHANNEL ACCOUNTING APPROACH

This article exploits changes in the distribution of immigrants across 20 Organization for Economic Co‐operation and Development countries from 1960 to 2005 in order to assess their contribution to income of destination countries. The non‐random sorting of immigrants across countries is addressed by using an instrumental variable strategy. The instrument is built by estimating a bilateral migration model incorporating exogenous origin country determinants of migration. Aggregate results reveal that immigrants have a positive effect on income that works primarily through total factor productivity (TFP). We further construct a novel dataset from censuses and labor force surveys to explore the information on the age of immigrants. Contrasting income effects are found across age groups: a higher share of immigrants among the youth has a negative impact on aggregate income, while a higher share of immigrants among prime‐aged workers has a positive effect. We interpret this disparity as short‐term versus medium‐term effects. Adjustments over time involve changes in TFP but also in the human capital of the native‐born. (JEL F22, J24, J31, O31)