Assume you are a researcher observing a trust game. The trustor (I) has $10 as initial...

Transcribed Image Text:

Assume you are a researcher observing a trust game. The trustor (I) has $10 as initial investment. Whatever amount (1) decides to send to trustee (T), will be multiplied by 3. (T) in turn will decide to send whatever amount back to (I). In most studies (1) sends almost half of the $10 while (T) sends back a third of the amount received. What if the initial investment is $500,000. How does this change the decisions made by both players? What's the likely effects of larger amounts on trust? Which of the two models (neoclassical vs behavioral) can explain this situation better? Assume you are a researcher observing a trust game. The trustor (I) has $10 as initial investment. Whatever amount (1) decides to send to trustee (T), will be multiplied by 3. (T) in turn will decide to send whatever amount back to (I). In most studies (1) sends almost half of the $10 while (T) sends back a third of the amount received. What if the initial investment is $500,000. How does this change the decisions made by both players? What's the likely effects of larger amounts on trust? Which of the two models (neoclassical vs behavioral) can explain this situation better?

Answer rating: 100% (QA)

When the initial investment is 500000 instead of 10 it is likely to have a significant impact on the decisions made by both players in the trust game ... View the full answer