Trustworthy by design

Sen Geng and Menglong Guan

Games and Economic Behavior, 2023, vol. 141, issue C, 70-87

Abstract: We explore theoretically and experimentally whether information design can be used by trustees as a signaling device to boost trusting acts. In our main setting, a trustee partially or fully decides a binary payoff allocation and designs an information structure, then a trustor decides whether to invest. In the control setting, information design is not available. In line with the standard equilibrium analysis, we find that introducing information design increases trustworthiness and trusting acts, and some trustees choose full trustworthiness with the most informative structure. We also find systematic behavioral deviations, including some trustees' choosing zero trustworthiness with the least informative structure and trustors' overtrusting in low informative structures. We finally provide a model of heterogeneity in prosociality and strategic sophistication, which rationalizes the experimental findings.

Keywords: Trust; Trustworthiness; Information design; Prosociality; Strategic sophistication (search for similar items in EconPapers)
JEL-codes: C92 D82 D83 D91 M31 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:141:y:2023:i:c:p:70-87

DOI: 10.1016/j.geb.2023.05.009

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