“We are all born brave, trusting and greedy, and most of us remain

greedy.”Mignon McLaughlin (1966)

Larissa BătrânceaUniversitatea Babeş-Bolyai, Romania

Anca NichitaUniversitatea Babeş-Bolyai, Romania

IAREP/SABE/ICABEEP CONFERENCEHigher School of Economics 1-3 September, Moscow2010

World Value Survey Data

COUNTRY

TRUST DEGREES

TOTAL UNITED STATES

BULGARIA ROMANIA

Trust completely

1,2% 0,3% 2,3% 1,3%

Trust a little 22,1% 40,2% 17,6% 11,6%

Not trust very much

49,5% 45,5% 56% 48,7%

Not trust at all 27,1% 14% 24% 38,4%

Total 100% 1214 (100%) 966 (100%) 1670 (100%)

Table 6. “Trust in completely strangers” levels

www.wvsevsdb.com

The link between trust reported in surveys and economic growth

• Knack & Keefer (1997): find empirical support that trust positively affects growth rates, based on World Value Survey question

• Zak & Knack (2001): income inequality and ethnic diversity affect trust on a national level

Motivation To compare trust and trustworthiness levels with those in other countries (i.e.

Bulgaria, USA)

Koford (2003): compares results with Berg, Dickhaut & McCabe (1995) data;

Bulgarians had higher levels of trust and trustworthiness, leaving the game with more

money than the Americans did

Cox (2004): American subjects display high levels of trust and trustworthiness

To identify differences between data reported in surveys (World Value Survey)

and economic behavior

Motivation To study the influence of gender on economic decisions

Chaudhuri & Gangadharan (2002): males were more altruistic in the role of senders

Buchan & Croson (2004): gender didn’t influence senders transfer intentions; in turn,

female receivers stated to be more trustworthy than men did

Buchan, Croson & Solnick (2008): males showed more trust than females; females

were more trustworthy

Research Questions:

1)What are the trust and trustworthiness levels in Romania?

2) Does gender influence subjects‘ behavior?

3) What is the relationship between experimental data and survey data?

Experimental Design

Subjects from rooms A and B are paired randomly

Room A Room B

Room A

10 lei

Each subject in room A receives an

endowment of 10 lei.

Room A Room Bn lei

Each subject in room A decides how much of the 10 lei to sent her

partner in room B

Room A Room Bn x 3

The amount sent is tripled

Room A Room B

r lei

Each subject in room B decides whether to return something to her

partner in room A

At the end of the game

First mover’s earning = 10 – n + r

Second mover’s earning = 3 x n - r

Hypotheses

Trust and trustworthiness levels in Romania differ from those in other countries

Gender influences economic behavior

There is a difference between survey data and experimental data

Subject pool sample

• Gender: 39 females, 27 males

• Age: between 20 and 22

• Education: undergraduate students in Economics

• Number of participants: 68

FEED-BACK FROM SUBJECTS

“Experiments like this should be organized more often, because students actually learn how to handle their potential business partners and what to expect from them.”

“This is a useful experience. It teaches you whom and how much to trust, in the likelihood of starting a business deal in the future.”

“What a fool! Had he given me more, we both would have been better off.”

“This experiment has thought me that, if you are a businessman, you cannot make a decision without taking your partner into account.”

Average transfers comparison Senders trust levels

5,7

6,115,97

5,45,65,86

6,2

Romania Bulgaria USA

Country

Am

ount

sen

t

Receivers trustworthiness levels

8,61 7,744,94

0

5

10

Romania Bulgaria USA

Country

Am

ount

retu

rned

R

E

S

U

L

T

S

Average return ratio

151% 132%91%

0%50%100%150%200%

Romania Bulgaria USA

Country

Ret

urn

ratio

R

E

S

U

L

T

S

Transfer Patterns

Senders

Receivers

R

E

S

U

L

T

S

Gender effects on transfers

1. Senders transfers OLS: gender does not influence transfers ( t = 0,736; p = 0,467)

2. Receivers transfers OLS: gender does influence transfers ( t = 1,843; p = 0,075)

R

E

S

U

L

T

S

Trust completely + trust a little

12,90% 19,90%

40,50%

0,00%

20,00%

40,00%

60,00%

Romania Bulgaria USA

Country

Trus

t lev

el

…back to the World Value Survey R

E

S

U

L

T

S

Instead of conclusions, …Crossroads of thoughts

How do we explain the difference between high levels of trust found through experimental games in Eastern Europe and low levels of trust reported by surveys (World Value Survey)?

Does the trust game really measure trust?

Open questions