scholarly journals When the rich do (not) trust the (newly) rich: Experimental evidence on the effects of positive random shocks in the trust game

2021 ◽  
Author(s):  
Hernan Bejarano ◽  
Joris Gillet ◽  
Ismael Rodríguez Lara
Keyword(s):  
Experimental Evidence ◽  
Reference Points ◽  
Trust Game ◽  
Inequality Aversion ◽  
Study Behavior ◽  
Random Shock ◽  
The Rich ◽  
Positive Shock ◽  
Random Shocks ◽  
First Mover

We study behavior in a trust game where first-movers initially have a higher endowment than second-movers but the occurrence of a positive random shock can eliminate this inequality by increasing the endowment of the second-mover before the decision of the first-mover. We find that second-movers return less (i.e., they are less trustworthy) when they have a lower endowment than first-movers, compared with the case in which first and second-movers have the same endowment. Second-movers who received the positive shock return more than those who did not; in fact, second-movers who received the positive shock return more than second-movers who had the same endowment as the first-mover from the outset. First-movers do not seem to anticipate this behavior from second-movers. They send less to second-movers who benefited from a shock. These findings suggest that in addition to the distribution of the endowments the source of this distribution plays an important role in determining the levels of trust and trustworthiness. This, in turn, implies that current models of inequality aversion should be extended to accommodate for reference points if random positive shocks are possible in the trust game.

scholarly journals Trust and trustworthiness after negative random shocks

2020 ◽  
Author(s):  
Hernan Bejarano ◽  
Joris Gillet ◽  
Ismael Rodríguez Lara
Keyword(s):  
Natural Disasters ◽  
Trust Game ◽  
Random Shock ◽  
Die Roll ◽  
Random Shocks ◽  
First Mover

We investigate experimentally the effect of a negative endowment shock in a trust game to assess whether different causes of inequality have different effects on trust and trustworthiness. In our trust game there may be inequality in favor of the second mover and this may (or may not) be the result of a negative random shock (i.e., the outcome of a die roll) that decreases the endowment of the first-mover. Our findings suggest that inequality leads to differences in behavior. First-movers send more of their endowment and second-movers return more when there is inequality. However, we do not find support for the hypothesis that the cause of the inequality matters. Behavior after the occurrence of a random shock is not significantly different from the behavior when the inequality exists from the outset. Our results highlight that we have to be cautious when interpreting the effects on trust and trustworthiness of negative random shocks that occur in the field (e.g., natural disasters). Our results suggest that these effects are largely driven by the inequality caused by the shock and not by any of the additional characteristics of the shock like saliency or uncertainty.

scholarly journals Loss Aversion and Consumption Choice: Theory and Experimental Evidence

2015 ◽  
Vol 7 (2) ◽  
pp. 101-120 ◽  
Author(s):  
Heiko Karle ◽  
Georg Kirchsteiger ◽  
Martin Peitz
Keyword(s):  
Experimental Evidence ◽  
Loss Aversion ◽  
Consumer Choice ◽  
Rational Expectations ◽  
Choice Theory ◽  
Choice Model ◽  
Reference Points ◽  
Price Uncertainty ◽  
Theoretical Predictions

We analyze a consumer-choice model with price uncertainty, loss aversion, and expectation-based reference points. The implications of this model are tested in an experiment in which participants have to make a consumption choice between two sandwiches. Participants differ in their reported taste for the two sandwiches and in their degree of loss aversion, which we measure separately. We find that more-loss-averse participants are more likely to opt for the cheaper sandwich, in line with theoretical predictions. The estimates in the model with rational expectations are slightly more significant than those with naïve expectations. (JEL D11, D12, D84, M31)

scholarly journals Reference Points and Redistributive Preferences: Experimental Evidence

2015 ◽  
Author(s):  
Jimmy Charité ◽  
Raymond Fisman ◽  
Ilyana Kuziemko
Keyword(s):  
Experimental Evidence ◽  
Reference Points

scholarly journals Reliability modeling for competing failure systems with instant-shift hard failure threshold

2018 ◽  
Vol 42 (4) ◽  
pp. 457-467 ◽  
Author(s):  
Jingyi Liu ◽  
Yugang Zhang ◽  
Bifeng Song
Keyword(s):  
Sensitivity Analysis ◽  
System Reliability ◽  
Reliability Model ◽  
External Shocks ◽  
Reliability Modeling ◽  
Soft Failure ◽  
Random Shock ◽  
Hard Failure ◽  
Engineering Practices ◽  
Random Shocks

Many researchers have modeled systems under multiple dependent competing failure processes (MDCFP) in recent years. Typically, those failure processes consist of degradation (soft failure) and random shock (hard failure). In previous papers the threshold of hard failure has been a fixed value, which does not reflect engineering practices. Threshold refers to the ability to resist external random shocks, which shifts with time as the system is used. Thus, this paper establishes a model for MDCFP with instant-shift hard threshold. The hard failure threshold changes with time instantaneously, and it is also influenced by external shocks. This paper also presents a system reliability model. The effectiveness of the presented model is demonstrated by a reliability analysis of the micro-engine at Sandia National Laboratories. In addition, a sensitivity analysis is performed for specific parameters.

scholarly journals Contracts as Reference Points - Experimental Evidence

2008 ◽  
Author(s):  
Ernst Fehr ◽  
Oliver D. Hart ◽  
Christian Zehnder
Keyword(s):  
Experimental Evidence ◽  
Reference Points

scholarly journals Reliability assessment for systems suffering competing degradation and random shocks under fuzzy environment

2019 ◽  
Vol 103 (1) ◽  
pp. 003685041988108
Author(s):  
Hongping Yu ◽  
Mao Tang
Keyword(s):  
Fuzzy Numbers ◽  
Epistemic Uncertainty ◽  
Operating Time ◽  
Reliability Assessment ◽  
Cumulative Damage ◽  
Fuzzy Environment ◽  
Random Shock ◽  
Comparative Results ◽  
Random Shocks ◽  
Internal Degradation

Reliability assessment of multi-component systems under competing degradation and random shocks has been intensively investigated in recent years. In most cases, the parameters associated with competing degradation and random shocks are represented by crisp values. However, due to insufficient data and vague judgments from experts, it may produce epistemic uncertainty with those parameters and they are befitting to be described as fuzzy numbers. In this article, the internal degradation is treated as a continuous monotonically increasing random process with respect to operating time, whereas the amount of cumulative damage produced by each external random shock is modeled by a geometric process. As components in a system suffer the same environmental condition, an external random shock will produce different amounts of cumulative damage to each component simultaneously. Each component fails when either the internal degradation or cumulative damage from the random shocks, whichever comes first, exceeds its corresponding random thresholds. Moreover, the parameters associated with the internal degradation and the random shocks are represented by triangular fuzzy numbers. The fuzzy reliability functions of components and the entire system are evaluated by a set of optimization models. A multi-component system, together with some comparative results, is presented to illustrate the implementation of the proposed method.

Trust, Trustworthiness, and Age: Experimental Evidence

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Moritz Lukas ◽  
Markus Nöth
Keyword(s):  
Elementary School ◽  
Experimental Evidence ◽  
Age Groups ◽  
Trust Game

Abstract Based on an incentivized non-anonymous trust game with 230 elementary school pupils aged between 6 and 11 years, we investigate the development of trust and trustworthiness across age groups. Trust increases with age, thereby increasing the profits of both the trustor and the trustee. The trustee keeps most of the profits. These results replicate the findings of Sutter and Kocher (2007) in that trust increases with age and trustworthiness exists in all age groups that are examined in our study; however, the amounts transferred between subjects in our experiment are substantially higher, a result which is likely to be driven by the non-anonymity in our setting.

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