SSE/EFI Working Paper Series in Economics and Finance
Trust and truth
(), Magnus Johannesson
(), Jannie Lilja
() and Henrik Zetterqvist
Abstract: In a laboratory experiment, we create relationships
between pairs of anonymous subjects through a Prisoners' dilemma game.
Thereafter the same subjects play a private values (sealed-bid double
auction) bargaining game with or without communication. Communication
substantially increases bargaining efficiency among subjects who cooperated
in the Prisoners' dilemma, but has no significant effect on bargaining
outcomes when one subject defected. Subjects who cooperated in the
Prisoners' dilemma bid more aggresively if their opponent defected.
Cooperators also lie more about their valuations when their opponent
defected: Compared to the case of mutual cooperation, the cooperators' rate
of honest revelation decreases from 64% to 6% and the rate of outright
deception increases from 7% to 53%. Our results provide qualitatively new
evidence that many people are strong recipricators: They are willing to
bear private costs in order to reward good behavior and punish bad
behavior, even when the rewards and punishments are unobservable.
Keywords: Bargaining; Communication; Honesty; Trust; Strong reciprocity; (follow links to similar papers)
JEL-Codes: C91; D74; Z13; (follow links to similar papers)
39 pages, November 1, 2006
Before downloading any of the electronic versions below
you should read our statement on
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Full text versions of the paper:
Questions (including download problems) about the papers in this series should be directed to Helena Lundin ()
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Design by Joachim Ekebom