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October 11, 2004

The Trust Game

I just heard a good presentation by James Cox of Arizona on his experimental work trying to figure out exactly how altruism works. The basic game in this literature is the Trust Game, one version of which goes as follows:

There are two subjects, a Sender and a Responder. Each is given $10.

The Sender can keep his entire $10 or send X to the Responder. If he sends X, then it is tripled for the Responder, who receives 3X.

The Responder then can keep his entire pile of money, or send Y back to the Sender.

The game is played only once. The Sender and Responder do not meet face to face, and it is best if the experiment is done double-blind, meaning that the researcher does not find out who sent what (and possibly shame them). All the rules are common information for all the subjects.

If people follow the simplest "homo economicus" behavior, the Sender sends nothing to the Responder. A pure altruist or a utilitarian Sender would send his entire $10, since it would turn into $30 for the Responder.

In practice, some Senders send nothing, and most send a few dollars, and a few send all $10. Most Responders respond with a fraction (often half) of the value they received, but some respond with nothing. On average, Senders don't get back as much as they send, but they are close to breaking even.

This is relevant to the thinking I've been doing on the subject of Gratitude, which Professor Cox calls Positive Reciprocity in this context. He is very interested not just in the Responder, though, but also in the Sender, who needs what is conventionally called "Trust" that the Responder will be properly grateful.

Posted by erasmuse at October 11, 2004 03:39 PM

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