Affiliation:
1. Burgundy School of Business, Université Bourgogne Franche-Comté, France
Abstract
We present a field experiment investigating the mechanism by which community currencies enhance trust. Our question is the following: do I trust more when using a community currency because I am a trusting-type person or because I think that you are trustworthy? We call the former preference-based trust; while the latter is belief-based trust. We apply a modification of the standard trust game from the experimental economics literature to disentangle these mechanisms. Player A has to choose whether or not to trust player B, and player B can either reciprocate that trust or not. Our innovation is in experimentally separating the currency in which the game is played ( effective currency), from the currency preferred by the participant ( preferred currency). If the mechanism is preference-based, then preferred currency will determine trust more than effective; if it is belief-based, then the effective currency will be determinant. We find strong evidence of the preference-based mechanism of community currencies on trust, and only weak evidence of the belief-based mechanism.
Subject
General Economics, Econometrics and Finance
Cited by
2 articles.
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