CeDEx Seminar - Wieland Mueller (University of Vienna)

Location: A40 Sir Clive Granger Building
Date(s): Wednesday 13th March 2019 (14:00-15:00)
Description: Our speaker this week is Wieland Müller (University of Vienna).

Title: The Costs and Benefits of Gradualism

Abstract:
To study the evolution of trust, we examine a setting with an infinite horizon, uncertainty regarding the trustworthiness of receivers, and various levels of trust. In equilibrium, senders gradually increase trust levels with reciprocating receivers. We find strong experimental evidence of such gradualist strategies. However, comparing this setting to one in which trust is an all-or-nothing decision, we find in stark contrast to theory, that the latter leads to more efficient outcomes. In a series of follow-up experiments, we highlight the role of homemade beliefs and identify circumstances in which gradual strategies are not only used but also more efficient. We provide a possible interpretation of our results, arguing that gradualism might be costly or beneficial depending on the level of social capital prevalent in a (lab) society.

Venue: A40 Sir Clive Granger Building

Centre for Decision Research and Experimental Economics

Sir Clive Granger Building
University of Nottingham
University Park
Nottingham, NG7 2RD

telephone: +44 (0)115 951 5458
Enquiries: jose.guinotsaporta@nottingham.ac.uk
Experiments: cedex@nottingham.ac.uk