Sector-Specific Associations, Trust, and Survival of PPPs: A Behavioral Experiment Based on the Centipede Game

Abstract

Abstract Public-private partnerships (PPPs) have become widespread in the delivery of public services. This study explores behavioral mechanisms of building and eroding trust in partnering across sectors at the micro-level of interaction between public and private partners. Combining classic theoretical concepts on the development of interorganizational trust and administrative behavior, this study derives theory suggesting that partners’ sector affiliation may have adverse signaling effects on individuals’ intention to uphold effective partnerships over time, and that this intent may be moderated by sector-specific associations. Tested with a novel and dynamic multi-stage behavioral experiment based on the classic centipede game conducted with German graduate students (N = 482; Obs. = 4,338), results suggest that sector affiliation functions as a strong but potentially misleading signal for partners’ strategic behavior in PPPs and that sector-specific associations asymmetrically moderate respondents’ will to collaborate. These findings contribute to a more nuanced theoretical understanding of the micro-foundations of strategic behavior, particularly at nascent stages of PPPs, calling into question basic assumptions about coordination efficiency in cross-sectoral partnerships.