Experimental investigation of the development, maintenance, and disintegration of trust between anonymous agents

Abstract

In this dissertation the dynamics of trust between anonymous agents playing iterated trust dilemmas are examined. Two separate experimental institutions are used. The first institution is a three-player Centipede Game. The second is a novel institution called the Real Time Trust Game. Both games have structures with diametrically opposed Pareto optimal outcomes and Nash equilibrium. Mutually anonymous individuals play the games for real pecuniary rewards. A variety of experimental manipulations are employed to determine their relative effects on individuals' decisions, as well as the changes in population dynamics. General findings confirm the fragility of trust in these barren institutions, the institutions used here are barren in the sense that the normal social mechanisms that typically facilitate trust (credible communication, reputation, potential retaliation) are unavailable to players. As a consequence, most of the results display a slow breakdown of trust between players, with the rate of decay being subject to experimental manipulation. Nonetheless, individual differences are substantial and a handful of players resist playing narrowly rational strategies, exhibiting "hard-core" cooperative tendencies.