Trust Game

Definition

The trust game is a behavioral economics experiment that measures the level of trust between individuals. It involves two players, an investor and a trustee, who interact in a series of decisions to determine how much money is exchanged and returned between them.

5 Must Know Facts For Your Next Test

1. The trust game is often used to study the role of trust and reciprocity in economic and social interactions.
2. In the trust game, the investor's decision to send money to the trustee represents an act of trust, as the investor risks losing the money if the trustee does not reciprocate.
3. The trustee's decision to return a portion of the money to the investor represents an act of reciprocity, as the trustee has the opportunity to betray the investor's trust.
4. The amount of money sent by the investor and the amount returned by the trustee are used to measure the level of trust and reciprocity between the two players.
5. The trust game has been used in various contexts, including studying the impact of cultural differences, institutional environments, and individual characteristics on trust and reciprocity.

Review Questions

• Explain how the trust game measures the level of trust between individuals.
  • In the trust game, the investor's decision to send money to the trustee represents an act of trust, as the investor risks losing the money if the trustee does not reciprocate. The trustee's decision to return a portion of the money to the investor represents an act of reciprocity, as the trustee has the opportunity to betray the investor's trust. The amount of money sent by the investor and the amount returned by the trustee are used to measure the level of trust and reciprocity between the two players. The trust game is often used to study the role of trust and reciprocity in economic and social interactions.
• Describe how the trust game can be used to understand the impact of context on political decisions.
  • The trust game has been used in various contexts to study the impact of factors such as cultural differences, institutional environments, and individual characteristics on trust and reciprocity. By manipulating the context in which the trust game is played, researchers can gain insights into how these contextual factors influence the decision-making of the investor and trustee, and how this, in turn, can affect political decisions. For example, the trust game can be used to explore how trust and reciprocity are influenced by the political and institutional environment, and how these factors shape the way individuals engage in economic and social interactions that have political implications.
• Evaluate how the findings from trust game experiments can inform our understanding of the importance of context for political decisions.
  • The trust game experiments provide valuable insights into the role of trust and reciprocity in shaping economic and social interactions, which can have significant implications for political decisions. By examining how factors such as cultural differences, institutional environments, and individual characteristics influence the level of trust and reciprocity in the trust game, researchers can gain a better understanding of the importance of context for political decisions. This knowledge can inform policymakers and political leaders on how to create institutional environments and policies that foster trust and encourage cooperative behavior, which can lead to more effective and sustainable political outcomes. Additionally, the trust game can help researchers identify the psychological and behavioral factors that drive political decision-making, allowing for a more nuanced and context-specific approach to understanding and addressing political challenges.

Related terms

Behavioral Economics: An interdisciplinary field that combines insights from psychology, economics, and other social sciences to understand how people make decisions and how those decisions deviate from the assumptions of traditional economic theory.

Reciprocity: The practice of exchanging things with others for mutual benefit, often used to describe the expectation that people will respond to positive actions with positive actions and to negative actions with negative actions.

Investor-Trustee Relationship: The dynamic between the two players in the trust game, where the investor decides how much money to send to the trustee, and the trustee decides how much of that money to return to the investor.