NES Center for the Study of Diversity and Social Interactions and HSE International Center for the Study of Institutions and Development are happy to invite you to our joint meeting of the Research Seminar on Diversity and Development and HSE Seminar on Political Economy.

Speaker: Wieland Müller (Universität Wien), will present  "Building Trust: The Costs and Benefits of Gradualism" (joint work with Melis Kartal and James Tremewan).

Registration:  till noon of June 11.

Abstract:

To study the development 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.