Investment Choice Architecture in Trust Games: When “All‐in” Is Not Enough

Abstract

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.

Effects of sex and sex-related facial traits on trust and trustworthiness: An experimental study

“…Earlier studies by other authors revealed that in experiments trust levels tend to be higher in binary-choice variants of the trust game than in "investment games" with a continuum of choices of the trustor (Bolle, 1998;Eckel and Wilson, 2004;Gómez-Miñambres et al, 2021). At the same time, binary-scaled ("all-or-nothing") trust may also lead to a decrease in reciprocal trustworthiness (Ostrom and Walker, 2003;Gómez-Miñambres et al, 2021). However, our results confirm earlier findings (reported for both variants of the game) that in Europe and North America, a high degree of trust and trustworthiness toward anonymous strangers is quite typical in experimental Trust Games (Berg et al, 1995;Cochard et al, 2004;Eckel and Wilson, 2004;Wilson and Eckel, 2011;Wilson, 2018;Andreozzi et al, 2020;Müller and Schwieren, 2020;Gómez-Miñambres et al, 2021).…”

“…Even under anonymous conditions, trust and trustworthiness were manifested at a remarkably high level in our study 10.3389/fpsyg.2022.925601 Frontiers in Psychology 13 frontiersin.org population: the majority of participants were generally willing to goods to anonymous partners (70% of all cases), and were also trustworthy in that they frequently returned a fair share of the goods entrusted to them (46% of cases). Earlier studies by other authors revealed that in experiments trust levels tend to be higher in binary-choice variants of the trust game than in "investment games" with a continuum of choices of the trustor (Bolle, 1998;Eckel and Wilson, 2004;Gómez-Miñambres et al, 2021). At the same time, binary-scaled ("all-or-nothing") trust may also lead to a decrease in reciprocal trustworthiness (Ostrom and Walker, 2003;Gómez-Miñambres et al, 2021).…”

“…More than two hundred studies on behavior in the anonymous Trust Game have been conducted in the last decades (games with binary-choice trust decisions: Bolle, 1998 ; Eckel and Wilson, 2004 ; Gómez-Miñambres et al, 2021 ; Jaeger et al, 2022 ; games with continuously scaled trust decisions are extensively reviewed by Ostrom and Walker, 2003 ; Johnson and Mislin, 2011 ; Van den Akker et al, 2020 ). Research on the effects of personalization on between-individual trust and trustworthiness became popular only recently.…”

“…At the same time, binary-scaled (“all-or-nothing”) trust may also lead to a decrease in reciprocal trustworthiness ( Ostrom and Walker, 2003 ; Gómez-Miñambres et al, 2021 ). However, our results confirm earlier findings (reported for both variants of the game) that in Europe and North America, a high degree of trust and trustworthiness toward anonymous strangers is quite typical in experimental Trust Games ( Berg et al, 1995 ; Cochard et al, 2004 ; Eckel and Wilson, 2004 ; Wilson and Eckel, 2011 ; Wilson, 2018 ; Andreozzi et al, 2020 ; Müller and Schwieren, 2020 ; Gómez-Miñambres et al, 2021 ). Such behavior cannot be explained by economic rationality, since reciprocation cannot be enforced by the trustor, and trust can easily be exploited by returning an unfair share or even nothing.…”

“…Although trust is frequently manifested in human everyday life ( Weiss et al, 2020 ), the evolutionary emergence and stability of trust is not well understood: as trust can be exploited, it should easily break down. Results of experimental studies based on the Trust Game ( Kreps, 1990 ; Berg et al, 1995 ) show that humans are generally predisposed to trust other individuals ( Berg et al, 1995 ; Ostrom and Walker, 2003 ; Johnson and Mislin, 2011 ; Wilson and Eckel, 2011 ; Wilson, 2018 ; Gómez-Miñambres et al, 2021 ), and that repeated interactions with the same partner are able to sustain and even reinforce trust ( Anderhub et al, 2002 ; Bornhorst et al, 2004 ; Cochard et al, 2004 ). Interestingly, in one-shot interactions, under “all-or-nothing” condition, the fact of being trusted does not systematically induce reciprocation ( Kiyonari et al, 2006 ), whereas in continuous versions of the game, with the option to vary the trust investment, insufficient demonstration of trust reduces reciprocal trustworthiness ( Gómez-Miñambres et al, 2021 ).…”