Investment Choice Architecture in Trust Games: When ‘All-In’ Is Not Enough

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Abstract
  • While many economic interactions feature "All-or-Nothing" options nudging investors towards going "all-in," such designs may unintentionally affect reciprocity. We manipulate the investor's action space in two versions of the "trust game." In one version investors can invest either "all" their endowment or "nothing." In the other version, they can invest any amount of the endowment. Consistent with our intentions-based model, we show that "all-or-nothing" designs coax more investment but limit investors' demonstrability of intended trust. As a result, "all-in" investors are less generously reciprocated than when they can invest any amount, where full investments are a clearer signal of trustworthiness.
TitleInvestment Choice Architecture in Trust Games: When ‘All-In’ Is Not Enough
CreatorShields, T. W.
Gómez-Miñambres, Joaquin
Schniter, E.
PublisherEconomic Inquiry
Academic DepartmentEconomics
DivisionSocial Sciences
OrganizationLafayette College
Date IssuedJanuary 2021
Date Available2022-05-13
TypeArticle
LanguageEnglish
Bibliographic CitationGómez-Miñambres, J., E. Schniter, and T. W. Shields (2021 Jan) "Investment Choice Architecture in Trust Games: When ‘All-In’ Is Not Enough." Economic Inquiry 59 (1): 300-314.
Standard IdentifierDOI 10.1111/ecin.12939
Handle 10385/9z903118b
Permalinkhttp://hdl.handle.net/10385/9z903118b
Rights Statement In Copyright In Copyright
Rights HoldersWestern Economic Association International
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