What is Trust game?
The trust game is an experimental paradigm for measuring trust and reciprocity between strangers. Player 1 sends some portion of an endowment to Player 2, the amount is multiplied, and Player 2 decides how much to return.
How it works
Berg et al. (1995) created the game to study trust without repeated interaction or reputation effects. The Nash equilibrium is for Player 2 to return nothing and for Player 1 to send nothing (anticipating this). Yet experimental results consistently show that Player 1 sends about 50% and Player 2 returns roughly the amount sent. The game measures trust (Player 1’s willingness to be vulnerable) and trustworthiness (Player 2’s reciprocity). Cross-cultural variations reveal different baseline levels of social trust.
Applied example
In a typical trust game, Player 1 receives $10 and sends $5 to Player 2. The $5 triples to $15. Player 2 now has $15 and typically returns about $5-7, leaving both players better off than if Player 1 had kept the full $10. The cooperation is not economically rational but reflects the social norm of reciprocity.
Why it matters
The trust game demonstrates that humans routinely extend trust beyond what pure self-interest would predict, enabling cooperation that rational actor models cannot explain.
