Till We Have Red Faces: Drinking to Signal Trustworthiness in Contemporary China

Abstract

AbstractInterpersonal networks facilitate business cooperation and socioeconomic exchange. But how can outsiders demonstrate their trustworthiness to join existing networks? Focusing on the puzzling yet common phenomenon of heavy drinking at China’s business banquets, we argue that this costly practice can be a rational strategy intentionally used by entrants to signal trustworthiness to potential business partners. Because drinking alcohol can lower one’s inhibitions and reveal one’s true self, entrants intentionally drink heavily to show that they have nothing to hide and signal their sincere commitment to cooperation. This signaling effect is enhanced if the entrants have low alcohol tolerance, as their physical reactions to alcohol (e.g., red face) make their drunkenness easier to verify. Our theory of heavy social drinking is substantiated by both ethnographic fieldwork and a discrete-choice experiment on Chinese entrepreneurs. This research illuminates how trust can be built absent sufficient support from formal institutions.