Cheating in the Trust Game

A large experimental literature has investigated the determinants of trust using variants of the so called trust game. However, a lot of ambiguity remains regarding the definition of what one is trusting: one extreme view is that since there are no explicit promises or guarantees made in the trust game, cheating is not defined and therefore trust is not implied. We address this concern by asking trust game participants their notion of cheating. We find that i) senders do have a notion of cheating, ii) the majority of senders would feel cheated by a negative return on their trust/investment, whereas a sizable minority defines cheating according to an equal split rule. The fact that participants in the trust game have a notion of what cheating behavior is does not necessarily prove that trust is affected by it. We show that participants’ trust behavior is significantly affected by their beliefs about the probability of being cheated. Given the importance of cheating in a trust game, we finally look at its determinants, unveiling the importance of values instilled by parents. JEL Classification: A1, A12, D1, O15, Z1