# Bestiary of Behavioral Economics/Trust Game

The Trust Game, designed by Berg et al. (1995) and otherwise called “the investment game,” is the experiment of choice to measure trust in economic decisions. The experiment is designed to demonstrate “that trust is an economic primitive,” or that trust is as basic to economic transactions as self-interest. As “trust is not intrinsically part of mainstream economics,” the success of this experiment in demonstrating the primacy of trust is problematic for basic assumptions of standard economics, which tend to ignore trust.

## Description

In the trust game, like the ultimatum game and the dictator game, there are two participants that are anonymously paired. Both of these individuals are given some quantity of money. The first individual, or player, is told that they must send some amount of their money to an anonymous second player, though the amount sent may be zero. The first player is also informed that whatever they send will be tripled by the experimenter. So, when the first player chooses a value, the experimenter will take it, triple it, and give that money to the second player. The second player is then told to make a similar choice – give some amount of the now-tripled money back to the first player, even if that amount is zero.

## Predicted Results

Under standard economic assumptions of rational self-interest, the predicted actions of the first player in the trust game will be that he will choose to send nothing. Even with perfect information about the mechanics of the game, the first player option to send nothing (and thus the second player option to send nothing back) is the Nash equilibrium for the game.

## Actual Results

In the original Berg et al. experiment, thirty out of thirty-two game trials resulted in a violation of the results predicted by standard economic theory. In these thirty cases, first players sent money that averaged slightly over fifty percent of their original endowment. Additional runs of this game by Brulhart showed similar results on the part of the first player, with only 11% of first players acting selfishly and giving nothing.
The results of the second players, in response to the non-zero transfers of the first players, were more varied in the above experiments. In the Berg et al. experiment, the amount reciprocated heavily depended on the level of social information the experimenters gave the second player about the first. However, no matter what information the experimenters gave, the average amount returned to the first player by the second was in excess of the amount originally sent. In the Brulhart experiment, the average money returned was also more than what was sent, with only 20% of the second players returning nothing.
In these experiments, the actual results of both the first and second players differed sharply from those results predicted under the standard economic assumption of pure self-interest.

## Explanations

Despite these results apparently contradicting the economic notion of rational self-interest, there are explanations of the results that preserve this notion. If they are acting under rational self-interest, a first player who decides to give anything to the second player must be expecting a positive return on their risk. One way for a first player to develop this expectation would be if the experimenter ran multiple trials of the game between the same two players, in order to build a reputation of the trustworthiness of the second player in the mind of the first. Then, the first player giving money to the second might be rationally self-interest, if they found the second player reliable enough to reciprocate. But, as the majority of first players send money to the second, even on the first run of the game, an alternative explanation to the results is needed.
An alternative approach, which denies that self-interest is the sole motivator to human actions, might be to look to evolution. As Berg states, “Evolutionary models predict the emergence of trust because it maximizes genetic fitness." So, if trust is evolutionarily innate, it would become a “behavioral primitive,” and thus an economic primitive alongside self-interest. This would then suffice to explain action under the trust game, at least for the first player.
The explanation as to the high average return by the second player might equally be dependent on the evolutionary innateness of trust. Berg suggests that the response of reciprocation is triggered by the second player viewing “the decision to send money [by the first player] as an attempt to use trust to improve the outcome for both parties.” Realizing this, the second player would be more inclined to reciprocate.
No matter what explanations is chosen, though, the results of the trust game make it evident that “the ability to include trust and reciprocity as part of the rational choice paradigm would seem to allow better explanations of economic institutions.”

## References

* ↑ Brulhart. "Does the trust game measure trust?” Economics Letters 115, no. 1 (2012): 20-23. doi: http://dx.doi.org.ezproxy1.library.arizona.edu/10.1016/j.econlet.2011.11.039
* ↑ Berg, Joyce, John Dickhaut, Kevin McCabe. “Trust, Reciprocity, and Social History.” Games and Economic Behavior 10, (1995): 123, 122-142. http://dibartolomeo.comunite.it/courses/ee/Berg%20et%20al%201995.pdf
* ↑ Berg 123
* ↑ WITTELOOSTUIJN, Arjen Van. “A Game-Theoretic Framework of Trust.” A Game-Theoretic Framework of Trust 33, no. 3 (2003): 53-71.
* ↑ Brulhart
* ↑ Berg 123
* ↑ Brulhart
* ↑ Berg 123-124
* ↑ Berg 123
* ↑ Berg 123
* ↑ Berg 134-135
* ↑ Brulhart
* ↑ Berg 123-124
* ↑ Berg 124
* ↑ Berg 124
* ↑ Berg 124, 138-139
* ↑ Berg 138