Contracting in the Trust Game

Research output: Contribution to journalArticle

Abstract

We present a simple mechanism that can be implemented in a simple experiment. In a modified trust game, the allocator can offer to pay the investor to cooperate. The mechanism is successful at implementing efficient outcomes: participants manage to achieve an efficient outcome, when this is possible, two-thirds of the time. While these results are encouraging, we find evidence that both concerns for fairness and motivation crowding out distort the incentives presented in the mechanism.
Original languageEnglish
JournalSSRN
DOIs
Publication statusPublished - 24 Jul 2010

Keywords

  • compensation mechanism, side payment, trust game, signaling, crowding out, concerns for equity taste for cooperation

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