Trust and risk revisited |
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Institution: | 1. Institute for Cognitive Science, University of Colorado Boulder, 344 UCB Boulder, CO 80309-0344, USA;2. Radboud University, Institute for Management Research, P.O. Box 9108, 6500 HK Nijmegen, The Netherlands;3. Utrecht University School of Economics, P.O. Box 80125, 3508 TC Utrecht, The Netherlands;1. American University, Kogod School of Business, United States\n;2. Niagara University, College of Business Administration, United States\n;3. Ludwig-Maximilians-Universität, Fakultät für Betriebswirtschaft, Munich, Germany\n |
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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. |
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Keywords: | Trust Trust game Decision making under uncertainty Risk Sources of uncertainty |
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