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Do Negative Random Shocks Affect Trust and Trustworthiness?
Author(s) -
Bejarano Hernán,
Gillet Joris,
RodriguezLara Ismael
Publication year - 2018
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/soej.12302
Subject(s) - shock (circulatory) , affect (linguistics) , endowment , inequality , trustworthiness , economics , econometrics , variation (astronomy) , demographic economics , social psychology , psychology , mathematics , political science , law , medicine , mathematical analysis , physics , communication , astrophysics
We report data from a variation of the trust game aimed at determining whether (and how) inequality and random shocks that affect wealth influence the levels of trust and trustworthiness. To tease apart the effect of the shock and the inequality, we compare behavior in a trust game where the inequality is initially given and one where it is the result of a random shock that reduces the second mover's endowment. We find that first‐movers send less to second‐movers but only when the inequality results from a random shock. As for the amount returned, second‐movers return less when they are endowed less than first‐movers, regardless of whether the difference in endowments was initially given or occurred after a random shock.