Who do you distrust and how much does it cost? An experiment on the measurement of trust

We address two problems with how trust is frequently measured in economics. First, we highlight the importance of clearly identifying the target of trust, which when ignored can lead to inconsistencies between trust measures. Second, we note the importance of distinguishing trust from other closely related concepts. We conduct an experiment using a new behavioral measure of trust – individuals’ willingness to pay to avoid being vulnerable to the target of trust – and vary the target of trust. To test our behavioral measure, we also collect data on potentially confounding effects (i.e., altruism and risk aversion) and on attitudinal measures of trust. Subjects discriminate based on perceived characteristics of different targets in determining whether to trust, in a manner consistent with trust elicited using attitudinal measures and with actual trustworthiness. Risk aversion and altruism do not correlate highly with our measure of trust.