In this thesis, we explore the power of trust as a cost-effective alternative to traditional contract enforcement measures. We propose a model, inspired by Ernst Fehr and Klaus M Schmidt’s model of inequality aversion, wherein individuals make contract decisions due to an innate set of preferences regarding their altruism and desire for reciprocity. We test our hypotheses using a controlled experiment, wherein subjects play a series of Dictator, Trust, and Contract games. Our results find, with significance, that individuals’ altruism has a significant impact on their contract performance, and that the effects of altruism can be crowded-in to decision-making by proper socialization.
Wine, Leonard, "The Effects of Trust and Socialization on Contract Performance: An Experimental Economics Study" (2019). Senior Independent Study Theses. Paper 8351.
Applied Behavior Analysis | Behavioral Economics | Econometrics
Bachelor of Arts
Senior Independent Study Thesis
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