If there exists a possibility for reputation building due to repeated interaction [15,16] and/or if the contract between the transacting parties is verifiable and enforceable , the problem whether to trust or not is easily mitigated because the parties face severe punishments on the off-equilibrium path. A competition among trustees is observed to have even stronger effects than reputation building , although  show in a somewhat different setting that observing past behavior also has a powerful impact on relationships.
has been cited by the following article:
- TITLE: Building Trust—One Gift at a Time
- AUTHORS: Maro？ Servátka,Steven Tucker,Radovan Vadovi？
- KEYWORDS: experimental economics, gift giving, investment game, trust, trustworthiness
JOURNAL NAME: Games
Sep 07, 2014
- ABSTRACT: This paper reports an experiment evaluating the effect of gift giving on building trust. We have nested our explorations in the standard version of the investment game. Our gift treatment includes a dictator stage in which the trustee decides whether to give a gift to the trustor before both of them proceed to play the investment game. We observe that in such case the majority of trustees offer their endowment to trustors. Consequently, receiving a gift significantly increases the amounts sent by trustors when controlling for the differences in payoffs created by it. Trustees are, however, not better off by giving a gift as the increase in the amount sent by trustors is not large enough to offset the trustees’ loss associated with the cost of giving a gift.