REWARDING TRUST - AN EXPERIMENTAL-STUDY

The issue of trust has recently attracted growing attention in researc h on work relations, capital - owner relations, cultural influences on the economic structures of different countries, and other topics. Thi s paper analyzes a simple experiment on trust and the reward of trust. Mr A is endowed with DM 80. He decides to trust Ms B (and give her hi s money) or not. Ms B is able to double the sum of money (if she gets it) and can then decide to give back as much as she likes. In an exper iment, 76% of subjects A decided to trust. The average reward they rec eived was DM 79.2 which is not significantly different from DM 80, the value of mistrust; nor was the average reward different from the aver age expectations of subjects A, i.e. a weak variant of the Rational Ex pectations Hypothesis is supported. In the paper we also look for diff erences between trusting and mistrusting A-subjects, for behavioral no rms, and other determinants of rewards.