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INVESTMENT CHOICE ARCHITECTURE IN TRUST GAMES: WHEN “ALL‐IN” IS NOT ENOUGH
Author(s) -
GómezMiñambres Joaquín,
Schniter Eric,
Shields Timothy W.
Publication year - 2021
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/ecin.12939
Subject(s) - nothing , endowment , reciprocity (cultural anthropology) , microeconomics , trustworthiness , economics , investment (military) , mathematical economics , computer science , political science , sociology , law , internet privacy , philosophy , epistemology , politics , anthropology
While many economic interactions feature “All‐or‐Nothing” options nudging investors towards going “all‐in,” such designs may unintentionally affect reciprocity. We manipulate the investor's action space in two versions of the “trust game.” In one version investors can invest either “all” their endowment or “nothing.” In the other version, they can invest any amount of the endowment. Consistent with our intentions‐based model, we show that “all‐or‐nothing” designs coax more investment but limit investors' demonstrability of intended trust. As a result, “all‐in” investors are less generously reciprocated than when they can invest any amount, where full investments are a clearer signal of trustworthiness. ( JEL C72, C90, C91, D63, D64, L51)