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Carry a big stick, or no stick at all: Punishment and endowment heterogeneity in the trust game
journal contribution
posted on 2019-03-22, 14:43 authored by Vicente Calabuig, Enrique Fatas, Gonzalo Olcina, Ismael Rodriguez-LaraWe investigate the effect of costly punishment in a trust game with endowment heterogeneity. Our findings indicate that the difference between the investor and the allocator’s initial endowments determines the effect of punishment on trust and trustworthiness. Punishment fosters trust only when the investor is wealthier than the allocator. Otherwise, punishment fails to promote trusting behavior. As for trustworthiness, the effect is just the opposite. The higher the difference between the investor and the allocator’s initial endowments, the less willing allocators are to pay back. We discuss the consistency of our findings with social preference models (like inequality aversion, reciprocity), the capacity of punishment (i.e., the deterrence hypothesis) and hidden costs of punishment (i.e., models of intrinsic and extrinsic motivation). Our results are hardly coherent with the first two (inequality aversion and deterrence), but roughly consistent with the latter.
Funding
Financial support from the Spanish Ministry of Education under the project ECO2014-58297-R is gratefully acknowledged. Enrique Fatas acknowledges the support of the ESRC Network for Integrated Behavioral Science (NIBS).
History
School
- Business and Economics
Department
- Economics
Published in
Journal of Economic PsychologyVolume
57Pages
153 - 171Citation
CALABUIG, V. ... et al, 2016. Carry a big stick, or no stick at all: Punishment and endowment heterogeneity in the trust game. Journal of Economic Psychology, 57, pp.153-171.Publisher
© ElsevierVersion
- VoR (Version of Record)
Publisher statement
This work is made available according to the conditions of the Creative Commons Attribution 4.0 International (CC BY 4.0) licence. Full details of this licence are available at: http://creativecommons.org/licenses/ by/4.0/Acceptance date
2016-09-21Publication date
2016-10-13Notes
This is an Open Access article. It is published by Elsevier under the Creative Commons Attribution 4.0 International Licence (CC BY). Full details of this licence are available at: https://creativecommons.org/licenses/by/4.0/ISSN
0167-4870Publisher version
Language
- en