Review of Behavioral Economics > Vol 6 > Issue 2

Plausible Deniability and Cooperation in Trust Games

Anthony S. Gillies, Rutgers University, USA, Mary L. Rigdon, Rutgers University, USA,
Suggested Citation
Anthony S. Gillies and Mary L. Rigdon (2019), "Plausible Deniability and Cooperation in Trust Games", Review of Behavioral Economics: Vol. 6: No. 2, pp 95-118.

Published: 16 Apr 2019
© 2019 A. S. Gillies and M. L. Rigdon
Behavioral Economics,  Experimental Economics,  Asymmetric information,  Principal-Agent,  Behavioral decision making
JEL Codes: C91D82D91
Trustreciprocitysocial preferencestrust gameguilt aversionbehavioral economicshigher order beliefs

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In this article:
1. Introduction
2. Plausible Deniability and Higher-Order Information
3. Design and Hypotheses
4. Experimental Procedures and Subject Pool
5. Main Results
6. Conclusion
A. Modeling Higher-Order Information
B. Demographic Information and Logistic Regression with Controls


What motivates agents to choose pro-social but dominated actions in principal-agent interactions like the trust game? We investigate this by exploring the role higher-order beliefs about payoffs play in an incentivized laboratory experiment. We consider a variety of ways of distributing higher order information about payoffs, including an asymmetrical distribution that generates “plausible deniability”: one agent (B) knows the other (A) doesn’t know that B knows how A’s payoffs are impacted by B’s actions. Agents, in turn, exploit this: otherwise trustworthy types are tempted into defecting when they have plausible deniability.