Dissecting Trust: Evidence From a Field Experiment in Rural Cameroon - Seminar

Abstract

Trust plays a key role in promoting cooperation, exchanges, and interactions among individuals; therefore it is believed to foster economic development. Sender’s behavior in the “investment game” (Berg et al. 1995) is widely employed to measure trust among individuals, but recent literature questioned its accuracy. We played the “investment game” with 3320 households from 200 rural villages in Cameroon. In addition, we measure participants’ altruism, distributional preferences, and expectations of  trustworthiness. We manipulate social pressure by randomly assigning participants to two treatments with different secrecy levels for payoffs, and measure the effect of social norms on behavior in investment game. Finally, we test whether senders behavior only measures a belief in someone else’s trustworthiness (i.e. trust), and whether trustworthiness in turn is only based on reciprocity. Controlling for risk preferences and other demographics, we find that senders’ behavior measures mostly trust, but it is not an accurate measure of trust.