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, mrigdon@rutgers.edu
 
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. http://dx.doi.org/10.1561/105.00000103

Published: 16 Apr 2019
© 2019 A. S. Gillies and M. L. Rigdon
 
Subjects
Behavioral Economics,  Experimental Economics,  Asymmetric information,  Principal-Agent,  Behavioral decision making
 
Keywords
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
References

Abstract

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.

DOI:10.1561/105.00000103