Glossary
Trust
What is trust?
In behavioral economics, trust involves accepting vulnerability based on expectations about another person or institution. Lending someone money, for example, can leave you dependent on what they choose to do next.
How researchers study trust
Berg, Dickhaut, and McCabe's 1995 investment game examined transfers and returns between participants. It became a widely used trust game.
In the original game, a sender could transfer some of a $10 payment to an anonymous counterpart; the experimenters tripled the amount, and the recipient chose how much to return. The sender was vulnerable because the recipient could keep all the transferred funds and their increase, leaving the sender with less than if they had sent nothing.
But sending money can reflect more than trust. Cox's 2004 study used additional comparison games to distinguish trust and reciprocity from preferences for benefiting other people. A transfer percentage is therefore not a pure trust score.
Example: trust in a marketplace
A buyer considering an unfamiliar seller may look at ratings or buyer protection. These provide information or change the risks of the exchange. Whether a particular feature improves trust or increases transactions needs to be tested.
Why it matters
Trust helps explain exchanges in which one person's outcome depends on another's choice. Keep the expectation, the risk, and the observed behavior separate.