Premium
Assigning Intentions when Actions Are Unobservable: The Impact of Trembling in the Trust Game
Author(s) -
Cox James C.,
Deck Cary A.
Publication year - 2006
Publication title -
southern economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.762
H-Index - 58
eISSN - 2325-8012
pISSN - 0038-4038
DOI - 10.1002/j.2325-8012.2006.tb00773.x
Subject(s) - unobservable , first mover advantage , trustworthiness , dictator game , psychology , social psychology , cognitive psychology , computer science , economics , marketing , business , econometrics
This article reports laboratory experiments investigating behavior in which players may make inferences about the intentions behind others' prior actions based on higher‐ or lower‐accuracy information about those actions. We investigate a trust game with first mover trembling, a game in which nature determines whether the first mover's decision is implemented or reversed. The results indicate that second movers give first movers the benefit of the doubt. However, first movers do not anticipate this response. Ultimately, it appears that subjects are thinking on at least three levels when making decisions: they are concerned with their own material well‐being, the trustworthiness of their counterpart, and how their own actions will be perceived.