Why trust out-groups? The role of punishment under uncertainty

Abstract

We conducted a hidden-effort trust game, in which we assigned subjects to one of two groups. The groups, which were formed through two different group formation processes, included a "social" group that required sharing and exchange among its members, and a "non-social" group that did not. Once assigned, subjects participated in the game with members from both groups, either with or without the opportunity to punish a trustee who may have defected on them. We found that for investors in the non-social group, the opportunity to punish a trustee worked to promote trust, but only when the trustee was a member of the other group. For the social group, the opportunity to punish had no effect on the investors' trust decisions, regardless of the trustee's group. We provide a theoretical framework to explain this asymmetric effect of punishment on trust. Our results suggest that groups with identities founded in sharing and exchange-a feature of globalized societies-may find it less necessary to engage in costly punishment. As a result, they may enjoy gains in economic efficiency.

Customer power, perceived behavioral control, and life insurance salespeople's reactions to customer sexual harassment

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Individualism, Economic Freedom, and Charitable Giving

“…This leads us to hypothesize that the in-group orientation of collectivist societies constrains charitable giving compared to individualistic societies. And giving derived from in-group orientation is not precluded by individualism (see, by way of comparison, Pan and Houser 2019 ). Munger (2015) and Ealy (2014) , invoking Polanyi ([1946] 2013 ), argue that the core of charitable giving is allowing individuals to form their own associations, leveraging their knowledge, connections, and talents.…”