Rewarding Trust: An Experimental Study - Springer Link

FRIEDEL BOLLE

REWARDING TRUST: AN EXPERIMENTAL STUDY

ABSTRACT. The issue of trust has recently attracted growing attention in research on work relations, capital – owner relations, cultural influences on the economic structures of different countries, and other topics. This paper analyzes a simple experiment on trust and the reward of trust. Mr A is endowed with DM 80. He decides to trust Ms B (and give her his money) or not. Ms B is able to double the sum of money (if she gets it) and can then decide to give back as much as she likes. In an experiment, 76% of subjects A decided to trust. The average reward they received was DM 79.2 which is not significantly different from DM 80, the value of mistrust; nor was the average reward different from the average expectations of subjects A, i.e. a weak variant of the Rational Expectations Hypothesis is supported. In the paper we also look for differences between trusting and mistrusting A-subjects, for behavioral norms, and other determinants of rewards. KEY WORDS: Trust, Reciprocity, Capital-owner relations

1. INTRODUCTION

Our everyday life is governed by trust to a wider extent than we are conscious of. Lending money to a friend, putting it in an investment fund, or simply depositing it in a bank requires trust. We rely on the repairman of our TV set to carry out only necessary repairs and to bill us only for those repairs he has carried out. Our employer pays us possibly more than the ‘equilibrium wage’ and in turn expects us to work with more than minimum effort. This latter kind of reciprocity, a variant of the efficiency wage theory, apparently helps to avoid a Prisoners’ Dilemma situation. In experiments by Fehr et al. (1993), the existence of such a kind of reciprocity is strongly supported and found to survive, even in a competitive market with an excess of workers. Fukuyama (1995), in his book on trust, discusses the hypothesis that different cultures’ business organisations heavily depend on trust between employers and workers, as well as between business partners. The Economist (13 July 1996, p. 19), in comparing Anglo-American and Continental owner–manager relations, states Theory and Decision 45: 83–98, 1998. c 1998 Kluwer Academic Publishers. Printed in the Netherlands.

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that “[a]t the heart of the difference is the issue of trust – the trust between those who supply capital and those who manage it”. Vertical relations in markets with small numbers of participants are always threatened by opportunism. From Transaction Cost Economics we know that complete contracts are practically impossible and that the costs of enforcing written contracts are often prohibitive. So firms necessarily have to trust; transaction costs are often evaluations of the exploitation risk.1 Trust and trustworthiness decrease transaction costs and thus make more efficient transactions possible, while “[w]idespread distrust in a society... imposes a kind of tax on all forms of economic activity...”, as Fukuyama (1995) states. Of course, trust is not necessarily rewarded: we all know of examples of people not paying their debts, of billing without corresponding repairs, and of employees unwilling to provide the services expected of them. Even worse, employees may defraud their firms, in Germany of some 10 billion Deutschmarks a year. Investors have lost billions of dollars to sometimes incompetent but often also deceitful fund managers. On the other hand, all this knowledge does not necessarily stop us from trusting others. There are situations where practically everybody trusts, there are situations where practically nobody trusts, and there are situations where some people trust and others do not.2 Most interesting is the last kind of situation. Under the assumption of rational individuals who are well-informed about the risk of trusting we should expect that, in such situations, the expected pay-offs of trust and mistrust are equal. This view is supported by sociologist James Coleman (1990).3 Of course, we should not forget that real individuals are not the ‘economic men’ of our normative theories but differ in intellectual skills, informational status, and in their risk-taking behavior. The experiment below reports a case where the expected value of trust and mistrust turn out to be equal. In Bolle (1995), it is shown that this is not an exception but rather a rule: such an equality can also be found in several further experimental studies concerning social situations that are connected with trust. Furthermore, in that paper, the emerging of trust and reciprocity is explained as an adaptive process. In this paper we will focus on the analysis of an experiment where a person A can trust – or not – a person B, and where B can


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reciprocate, i.e., reward trust, as far as she likes. The experiment is described in Section 2. The results of decisions and questions with respect to outspoken norms and expected behavior are presented and compared in Section 3. In Section 4, we look for behavioral standards in the written justifications of the rewarding subjects. The small amount of signalling which is left in the experiment is investigated in Section 5. Conclusions are reached in the final Section 6.

2. THE EXPERIMENT

Player A is endowed with DM 80. He can keep his money, which leaves him with DM 80 and player B with nothing. Alternatively, he can give it to player B who is able to carry out a profitable transaction which results in doubling the capital she has, i.e., B now has DM 160. B is not obliged to give any money back to A but she can do so. This procedure describes a two-stage game (see Figure 1).

Figure 1. The structure of the Rewarding Trust Game. Player B can choose any x 2 [0; 160].

I have called this game ‘Rewarding Trust’. Player B plays a dictatorship subgame, but she is in this comfortable situation only because player A has put her there – at a cost of DM 80! If player A trusts player B, he certainly expects that his trust will be rewarded. The experiment was a classroom experiment with 95 first year economic students. Of these, 63 played the role of player A and 32 the role of player B. After a verbal explanation of the game,

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the players received written instructions and, in addition, players A were given a decision form (see Appendix). After each player A had written down his decision (T or MT) on the decision form, each player B received two player A decision forms.4 Player B indicated on this form what she will give back (in the case of trust) or what she would have given back (in the case of mistrust). The reason for providing B with two decision forms was to get an idea of intrapersonal variances of decisions. Each player chose a pseudonym and a password, and wrote these down on his or her personal instruction sheets (where statements were also made by the subjects). Only the pseudonyms of the players and their decisions were recorded on the decision forms. After all decisions had been made (and additional information was gathered, see below) the decision forms and the instructions were collected. Four of the 64 decision forms were selected at random and the players involved were promised rewards according to their decisions.5 In order to guarantee anonymity, the ‘winners’ had to take their rewards later from a ‘cash room’ where a third person (not involved in the experiment or in the evaluation of the results) paid them according to a list of rewards after they gave their password. Anonymity is important if one wants to exclude all types of (unobservable!) social pressure from fellow students or the experimenter. The subjects should decide only on the basis of monetary outcomes and personal behavioral norms (which prevent most people from behaving in a completely selfish way). The players had to make two types of statements in addition to their decisions. All players A had to answer two questions: 1. What should player B give back if she receives the DM 80? 2. What will player B give back if she receives the DM 80? All players B who got DM 80 and gave back DM x were asked to write something about why they gave back precisely the amount they did.

3. RESULTS

The game theoretical analysis of the Rewarding Trust Game provides us with a unique subgame perfect equilibrium: Player B, if she


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Figure 2. Frequency distribution of reward by players B after a T-choice of player A (dark) and of hypothetical rewards after an MT-choice (shaded).

was trusted, would give back nothing; therefore player A does not trust. Readers who are familiar with economic experiments will not expect such a simple result, however. In Ultimatum Bargaining experiments,6 which are extremely simple from the point of view of game theory, some 90% of the decisions reveal behavior far from game theoretic equilibrium. In spite of such experiences with behavioral norms dominating monetary values, the aggregate frequency of trustful choices was surprisingly high, namely 48/63 = 76%. Intra-personal variances of reward decisions turned out to be very low. The most promising case for such comparisons, namely when a player B got one trusting and one mistrusting decision, suffered from the small number of such cases. So let us postpone all kinds of intrapersonal comparisons until Section 5. Three players B returned only one decision form, possibly because the other one communicated a mistrusting decision – this might cause a small bias in the results. Figure 2 presents the frequency distributions of x,7 not surprisingly the hypothetical rewards (mean value = 92.0) seem to be higher on the average than the real rewards (mean value = 79.2). A rank test, however, shows no significant differences of the distributions at the 5% level.8 For the following comparisons only the real rewards are used. These look a little bit as if they consist of two distinct distributions, one with a mean of 90 = (80 + 10) and one with a mean of 10 = (0 + 10). This might indicate two different views of the situation connected with different behavioral norms, or moral rules, or principles of justice. For 85% – 90% of the player B subjects, the DM 80 which player A has ‘invested’ seem to be the cornerstone of their moral obligation for rewarding; most of the other players B

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Figure 3. Frequency distribution of rewards player A thinks player B should give back (dark) and will give back (shaded).

do not seem to accept any obligation at all, but pay on the basis of mercy. The average real reward of trust is 79.2 which is surprisingly close to 80, the reward of mistrust. Is this because the player A subjects correctly anticipate the norms of the player B population? Certainly, the individual player A does not. This is not astonishing if we take account of different individual experience (in our case of a one-shot experiment in everyday life and not in the laboratory) and possibly fuzzy and even biased information processing. As questions about distributions have turned out to result in nonsense answers (people do not seem to think in terms of distributions), player B subjects were simply asked: 1. What should player B give back? 2. What will player B give back? The resulting distributions are presented in Figure 3. (Note that not all players A answered all questions.) In particular, I take the distribution resulting from question 2 as the average of individuals’ estimations regardless of what the individual connections between their internal representation of frequency distributions and answers to questions 1 and 2 are. Figure 3 shows that players A think that players B should give back (mean value = 103.9) more than they will give back (mean value = 79.7). Only one player A thought that B would give back more than he should while 42 players A expected the contrary result. It is clear that this implies a highly significant result in a sign test. This confirms claims we have often heard in everyday situations. Due to their own interests, ‘investors’ in the Rewarding Trust Game (parents, veterans, teachers, etc.) wish


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Figure 4. Frequency distribution of reward expected by trusting players A (dark) and by mistrusting players A (shaded).

stronger norms of reciprocity to apply. On the average, however, they have realistic expectations about the real strength of norms. This estimation is probably connected with the important predecision about which norms one believes to apply at all. Above I have pointed out the possibility that the reference value for most players B might be DM 80 while for some of them it might be DM 0. For a further discussion of the question concerning which norms apply under different circumstances, see Frey and Bohnet (1995) and Bohnet and Frey (1995). In Figure 4 we see that trusting players believe in higher rewards (mean value = DM 83.1) than mistrusting players (mean value = DM 64.5). A rank test, however, is not significant on the 5% level. What is striking is the seemingly irrational behavior of subjects who trusted though expecting a reward of less than DM 80 or mistrusted though expecting a reward of more than DM 80. This brings us back to the question of what people really mean when they answer questions like ‘What do you expect...?’. Instead of the mean value of the subjective distribution, their answer could be an estimation of the median or the mode or something else. Another possible reason for the decision to keep one’s money might be higher standards with respect to the question of what player B should give back. It turns out, however, that trusting and mistrusting players A do not differ in regard to this question, on the average. In Figure 5 we compare expected rewards (mean value = DM 79.7) and real rewards (mean value = DM 79.2). I think that Figure 5 tends to support the hypothesis that, on the average, people correctly anticipate the norms of their neighbors, despite the fact that the often expected reward of 120 (norm = 80 + 0.5 * 80) did not show

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Figure 5. Frequency distribution of expected rewards (dark) and real rewards (shaded).

up, and the revealed expectations about player B’s behavior have a less differentiated prominence structure9 (80, 100, 120) than real behavior (80, 90, 100). On the contrary, we might actually expect such a phenomenon. Saying that is 3.14 , we mean 3.135 6 6 3.145; saying that oak trees reach a maximum height of 50 meters instead of saying 52.4 meters, we are expressing something about the variance in their height. The latter may be the additional message of the round numbers players A use.

4. BEHAVIORAL NORMS

Only at first glance does it seem to be obvious what ‘moral’ behavior is, what ‘the right course’ of action is. A closer look at a situation often reveals a plethora of behavioral standards or norms which differ in quality and quantity – even in our relatively simple experimental world with two choices only.10 Our interest is focused on the question of how trust should be rewarded. We have two sources of information about these norms: on the one hand there are required, expected, and given rewards (see previous section) and on the other, the verbal justifications of players B. Not every player B delivered such a justification and some B’s delivered more than one argument. The following five norms (arguments) were revealed: (N 1) No obligation. Two players B who rewarded their trusting counterparts with DM 10 argued that there are neither rules nor promises to give anything to A.


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(N 2) Adequacy. One player B argued that her contribution to the joint profit of DM 160 was larger; therefore she paid back only DM 50. (N 3) Equity. This can be interpreted as a special case of (N 2). Four players B expressed the opinion that an equal share of the joint profit of DM 160 was just. (N 4) No loss for trusting. Three players B delivered another explanation than (N 3) for the same reward of DM 80. They did not want A to have a loss but maximised their income under this restriction. (N 5) Paying interest. Thirteen players B felt obliged to pay back more than DM 80 in order to pay for ‘A’s risk’ or simply for being provided with a capital of DM 80. One of them compared A to a bank and three others explicitly talked about paying interest. None of them, however, thought that more than DM 80 + DM 20 was appropriate while many players A required and even expected DM 80 + DM 40 (Figures 3 and 4). Five players B justified (solely or in addition to (N 5)) their reward of more than DM 80 by the possibility of a repeated transaction – not in this game as one of them made clear (and certainly no one expected that) but in ‘real life’. The meaning of such a contradictory statement may be: this is my usual motivation for reciprocity – why should I think about the problem anew? The analysis of the written statements tends to justify our former conjecture about the determination of rewards: either there is an obligation to pay at least DM 80 or there is no obligation at all. As the main differences between trusting and non-trusting players A, between required (should pay back) and expected (will pay back) rewards, and between expected and real rewards seem to stem from this fundamental predecision it seems to be appropriate to base statistical comparisons on the frequencies of reward < DM 80 versus reward > DM 80. The resulting test (Fisher’s Exact Probability Test), however, shows no differences on the 5% level for any of the distributions in Figures 2, 3, 4, and 5.

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5. SIGNALS AND DIFFERENTIATED BEHAVIOR

In the above experiment, most of the signals that decision-makers receive in everyday situations are suppressed. In particular, in faceto-face transactions there is a tremendous flow of conscious and unconscious, of observable and unobservable signals. As experimenters want a well-controlled situation, they usually try to constrain signalling. Most problematic is the influence of the experimenter himself on the behavior of the subjects so that some experiments are conducted with a procedure close to the ‘double blind’ standard of drug tests. In the Rewarding Trust experiment, players A do not get any signal at all that could serve to differentiate between players B. Player B, on the other hand, receives two kinds of signals: first, she is either confronted with two trusting players A, or with one, or with no trusting counterpart; secondly, she can read the pseudonym player A has chosen. Will these two signals influence her rewards? We know from Section 3 that the hypothetical rewards (for players A who mistrusted) are larger than the real rewards. If, however, we look at the seven cases where players A were confronted with one trusting and one mistrusting decision, we find an equal reward five times, the hypothetical reward being larger than the real reward once and vice versa one time. So we have to conclude that, possibly, trusting or mistrusting influences the level of reward but that it is not responsible for different rewards of the same player B. We find that players B who were confronted with two trusting decisions gave back DM 78.9 on the average; those who had to react to one trusting and one mistrusting decision gave back DM 90.0. These differences are not significant, however. The second signal is the pseudonym of player A. Does it have any influence at all? Perhaps subjects develop friendly or unfriendly feelings after reading the pseudonyms and condition their generosity on these feelings.11 Only if such impressions are interpersonally correlated do we have a chance to confirm this conjecture. All the pairs of pseudonyms of trustful player A subjects who were provided with different rewards by the same player B were listed and evaluated by 13 persons (economics students such as players B). The problem was explained to these persons and they were asked to guess which pseudonym got the higher reward. Although there is only one

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TABLE 1 Pseudonyms, rewards, and guesses of 13 persons as to which reward was higher. A two-tailed test on the 10% level indicates guessing probabilities significantly different from 0.5 for frequencies 10/13 or more extreme ones. Pseudonym 1

Reward 1

Guessed to be the higher reward by

Pseudonym 2

Reward 2

Drehrumbum Mephisto H. Gotlieb Meldya Patterson Lasso Klein

DM 90 DM 90 DM 100 DM 90 DM 100 DM 92 DM 80

6 10 8 5 8 5 7

Leopold Frankenstein FR Donald Dagobert Loco Mäuschen

DM 80 DM 70 DM 90 DM 100 DM 80 DM 96 DM 90

Guessed to be the higher reward by 7 3 4 8 5 8 6

One of the subjects did not indicate his/her guess in this comparison.

significant result of guessing, Table 1 looks fairly promising. We find guessing frequencies 8/13 or larger in 5 of 7 cases to be connected with higher rewards: see Table 1. 6. CONCLUSION

Is trust rewarded? Are trusting persons irrational? Are their expectations biased? Which norms are involved in the determination of rewards? These were the questions which motivated the above study. A short summary of the results shows: (i) 76% of the player A subjects trusted their anonymous partners. The expectation value of the reward of trust (average = 79.7) is not significantly different from the reward of mistrust (80). (ii) player A subjects think significantly higher rewards to be appropriate (average = 103.9) than do their counterparts B (79.2), but aggregate expectations of As about the rewards they are going to receive (78.7) are close to reality. (iii) There are a number of results which seem not to be so surprising. Mistrusting player A subjects expect smaller rewards (average = 64.5) than trusting player A subjects (83.6). Rewards by subjects

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B who pay to two trusting players A (average = 78.9) are lower than those of subjects B who received only one trusting decision (90.0). Rewards by subjects B who are trusted, i.e. real reward, are lower (average = 79.7) than those of subjects B who are mistrusted, i.e. hypothetical rewards (average = 92.0). Though some of the average values differ considerably, nonparametric tests reveal no significant differences. (iv) People seem to take into account even small and vague pieces of information like the handwritten pseudonyms subjects B could read – at least in situations where no other signals are attainable. What can we learn from these results? Trust is widespread and can even be found in situations of anonymous interaction. Each investor’s trust might be exploited, but on the average trust is not inferior to mistrust. This result is confirmed against a broader empirical background in Bolle (1995) where seven additional experimental studies of different authors are re-analysed with respect to the question ‘Does trust pay?’. All these studies are experimental games where some choices can be interpreted as revealing trust. Most of these games show a more complex structure than the Rewarding Trust game. The surprising result was that in 23 out of 25 decision situations analysed, the expected value of trust was not significantly different from the value of mistrust. The Rewarding Trust experiment shows that trusting without complete and enforceable contracts need not be irrational. People are possibly able to distinguish between situations where they can trust and other situations where they should not. Though they wish others to be more ‘thankful’ (ii) tells us that, on the average, they do a good job when guessing real thankfulness (reciprocity). All this shows us that a ‘rational’ (i.e., an economic!) theory of trust can be developed. Anonymity is rare within real interactions. In the Rewarding Trust experiment (as well as in most other economic experiments) anonymity is introduced to exclude disturbing influences which may also be difficult to measure. In further experiments, signalling should be introduced in a way which allows the evaluation of signals. So, as a first extension of the experiment, I plan to allow player B to send a message to player A. B may praise his trustworthiness or explicitly promise to send back a certain amount of money (without being forced to keep his promise). I think it will


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be interesting to see what kinds of messages are sent, how successful different messages are, and whether promises are kept.

ACKNOWLEDGMENT

I would like to thank Ms Antje Baier for computational assistance.

NOTES 1. Many small suppliers in the automotive industry are at the mercy of a big customer who, practically, determines the suppliers’ profits. 2. The categorising of such situations is probably culturally determined (see Choi et al. 1994), but may also be influenced by the social environment. 3. See also Williamson (1993) on the ‘calculativeness’ of trust. 4. One ‘artificial’ player A (with a trustful decision) was added in order to provide all players B with two decision forms. 5. For a comparison of random and sure payment, see Bolle (1990). 6. For a survey of such experiments, see Güth and Tietz (1990). 7. Most x were chosen as ending with a 0 digit; so the frequency distribution is described by classes named 10, 20, etc. The rare cases of deviating choices were proportionally distributed, for example 72 was counted as 0.8 times 70 and 0.2 times 80. 8. The distributions are not normal distributions, so the respective tests are not applicable. 2 -tests fail because of the difficulty to define more differentiated classes with sufficient numbers. In a rank test, we compare the average values of real reward in the 19 cases where B was confronted with two trustful decisions with the hypothetical rewards in the 4 cases where B was confronted with two mistrusting decisions. In order to compare independent samples, we disregard the results of the six mixed cases. Further statistical comparisons of the distributions in Figures 2–6 should perhaps take into account that these values express behavioral norms. Thus, in Section 5, an additional test is carried out. 9. Though all numbers between 0 and 160 are possible, only a small subset is ever chosen. A similar phenomenon is found with the values of coins or stamps. There are hardly any coins to be found around the world with values differing from 1, 2, 5, 10, 20 (sometimes 25), 50 cents (Pfennige, centimes ,... ). Schelling (1960) was the first to write about the decision focusing and coordination power of prominence. Albers and Albers (1983) develop a theory of prominent numbers. 10. For a discussion of behavioral norms in a 3-person (Team Selection) game, see Bolle (1994). 11. For an economist, such a conjecture is quite unusual; for a psychologist, on the other hand, this conjecture is quite normal and regarded as a question to be settled empirically.

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APPENDIX

Instructions to A Please write down:

:::::::::::::::::: Pseudonym

::::::::::::::: Password

Mr A possesses DM 80. He can give this sum of money to Ms B who is able to carry out a profitable, import transaction. After this transaction, Ms B possesses DM 160. Ms B can give back an arbitrary amount of between DM 0 and DM 160 to Mr A. You are Mr A! Please indicate on the decision form you have received whether you will leave your DM 80 to Ms B or not. In any case, please put your pseudonym on the form. Another person in this room will take the role of Ms B and will be informed about your decision. She will write down how much she will give back to you (should you have given her the DM 80). When all A and B decisions have been made, four persons A in this room will be selected at random. They and their business partners B will be paid according to their decisions. Please write down your decision on the decision form now! After you have made your decision please indicate: 1. In your opinion, which amount should B give back?

:::::::::::::::::::::::::::::::::::::::::::::: (please write down) 2. In your opinion, which amount will B give back?

:::::::::::::::::::::::::::::::::::::::::::::: (please write down)


Instructions to B Please write down:

::::::::::::::::: Pseudonym

::::::::::::::: Password

Mr A possesses DM 80. He can give this sum of money to Ms B who is able to carry out a profitable import transaction. After this transaction, Ms B possesses DM 160. Ms B can give back an arbitrary amount of between DM 0 and DM 160 to Mr A. You are Ms B! You will get the decisions of two persons A. Then, please indicate on the decision forms you have received how much you want to give back to Mr A. If Mr A has not left the DM 80 to you please indicate how much you would have given back. When all decisions have been made four persons A in this room will be selected at random. They and their business partners B will be paid according to their decisions. Please write down your decision on the decision form now!

Decision Form To be filled out by Mr A Please write down:

::::::::::::::::: Pseudonym

I decide (please indicate)

to give the DM 80 to Ms B to keep the DM 80. To be filled out by Ms B

Please write down:

::::::::::::::::: Pseudonym

If Mr A has left DM 80 to you, after your import transaction you now have DM 160. How much do you want to give back to Mr A? Answer: If Mr A has given the DM 80 to me I give back DM .................. (please write down) to Mr A.

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REFERENCES Albers, W. and Albers, G. (1983), ‘On the prominence structure of the decimal system’, in: R.W. Scholz (ed.), Decision Making under Uncertainty (pp. 271– 287). Amsterdam: North Holland. Anon. (1966), ‘Le défi américain, again’, Economist, 13 July, 19–21. Bohnet, I. and Frey, B.S. (1995), ‘Ist Reden silber und Schweigen gold? Eine o¨ konomische Analyse’, Zeitschrift für Wirtschafts- und Sozialwissenschaften 115: 169–209. Bolle, F. (1990), ‘High reward experiments without high expenditure for the experimenter?’, Journal of Economic Psychology 11: 157–167. Bolle, F. (1994), ‘Team selection – An experimental investigation’, Journal of Economic Psychology 15: 511–536. Bolle, F. (1995), ‘Does trust pay?’, Discussion Paper, Europa-Universität Viadrina Frankfurt (Oder). Choi, Ch.J., Grint, K., Hilton, B. and Taplin, R. (1994), ‘Achieving cooperation: Contracts, trust and hostages’, The Journal of Interdisciplinary Economics 5: 221–236. Coleman, J.S. (1990), Foundations of Social Theory, Cambridge, MA: The Belknap Press of Harvard University Press. Fehr, E., Kirchsteiger, G. and Riedl A. (1993), ‘Does fairness prevent market clearing? An experimental investigation’, The Quarterly Journal of Economics, 437–459. Frey, B.S. and Bohnet, I. (1995), ‘Institutions affect fairness: Experimental investigation’, Journal of Institutional and Theoretical Economics 151(2): 286–303. Fukuyama, F. (1995), Trust: The Social Virtues and the Creation of Prosperity, New York: The Free Press. Güth, W. and Tietz, R. (1990), ‘Ultimatum bargaining behavior: A survey and comparison of experimental results’, Journal of Economic Psychology 11: 417– 449. Schelling, T.C. (1960), The Strategy of Conflict. Cambridge, MA: Harvard University Press. Williamson, O. (1993), ‘Calculativeness, trust, and economic organization’, The Journal of Law and Economics 36: 453–486.

Address for correspondence: Prof. Dr. Friedel Bolle, Europa-Universität Viadrina, P.O. Box/Postfach 776, D-15207 Frankfurt/Oder, Germany Phone: +49 335 5534-289; Fax: +49 335 5534-390; E-mail: [email protected]