Building trust: The costs and benefits of gradualism
- Author(s)
- Melis Kartal, Wieland Müller, James Tremewan
- Abstract
We examine the prevalence of gradualist strategies and their effect on trust-building and economic gains in a setting with an infinite horizon, asymmetric information regarding the trustworthiness of receivers, and various levels of trust. The theoretical literature suggests that gradualist strategies mitigate asymmetric information problems and foster trust-building. However, we theoretically and experimentally show that gradualism sometimes reduces joint payoffs relative to a simple “binary” setting in which trust is an all-or-nothing decision. In a series of experiments, we vary the degree of asymmetric information as well as the economic returns to trusting behavior, and delineate circumstances under which gradualism may promote or curb efficiency.
- Organisation(s)
- Vienna Center for Experimental Economics, Department of Economics
- External organisation(s)
- University of Auckland, Wirtschaftsuniversität Wien (WU)
- Journal
- Games and Economic Behavior
- Volume
- 130
- Pages
- 258-275
- No. of pages
- 18
- ISSN
- 0899-8256
- DOI
- https://doi.org/10.1016/j.geb.2021.07.008
- Publication date
- 11-2021
- Peer reviewed
- Yes
- Austrian Fields of Science 2012
- 502045 Behavioural economics, 502021 Microeconomics
- Keywords
- ASJC Scopus subject areas
- Economics and Econometrics, Finance
- Portal url
- https://ucris.univie.ac.at/portal/en/publications/building-trust-the-costs-and-benefits-of-gradualism(48b6069e-189b-418d-afdf-b6651643f46a).html