Review of Behavioral Economics > Vol 7 > Issue 2

Short- and Long-run Effects of External Interventions on Trust

Igor Asanov, University of Kassel, Germany, igor.asanov@uni-kassel.de Simone Vannuccini, University of Sussex, UK, S.Vannuccini@sussex.ac.uk
 
Suggested Citation
Igor Asanov and Simone Vannuccini (2020), "Short- and Long-run Effects of External Interventions on Trust", Review of Behavioral Economics: Vol. 7: No. 2, pp 159-195. http://dx.doi.org/10.1561/105.00000118

Publication Date: 28 May 2020
© 2020 I. Asanov and S. Vannuccini
 
Subjects
Behavioral economics,  Government programs and public policy,  Industrial Organization,  Economic Theory: Game Theory,  Nascent and start-up entrepreneurs,  New venture creation process,  Behavioral Decision Making
 
Keywords
JEL Codes: C92, L50, D80
Trust gameExperimentPolicySubsidyAcademic spin-offs
 

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In this article:
1. Introduction
2. Further Related Literature
3. Theory and Implications
4. Experimental Design
5. Results
6. Discussion and Conclusion
A. Instructions
B. Additional Analysis
References

Abstract

We analyze experimentally the effects of external interventions such as subsidy and targeting on investment decisions, during an intervention and after. We employ a multi-period version of the trust (investment) game Berg et al. (1995) introducing either monetary incentives for contribution or providing a suggestion about the level of investment. The results of the experiment indicate that targeting is an effective instrument to promote trustful behavior while subsidy policy is effective in neither the short- or the long-run. Therefore, we suggest a targeting policy should be considered as an instrument to foster trustful behavior.

DOI:10.1561/105.00000118