This module is based on the article "How to Identify Trust and Reciprocity," by James C. Cox in Games and Economic Behavior, 46, 2004, pp. 260-281. The triadic (three-games) classroom exercise separates the motives of trust, reciprocity, and other-regarding preferences in an investment game.

• Single-game trust and reciprocity experiments is based on the assumption that a subject's utility payoff in a game is the same as his/her monetary payoff.
• Experiments with the triadic design can discriminate between transfers resulting from trust or reciprocity and transfers resulting from other-regarding preferences.

• to confront the positive amounts passed during the experiment with the prediction of self-regarding preferences model
• to introduce other-regarding preferences, trust, reciprocity
• to separate the motives of positive transfers of money
• to illustrate the effects of social norms

• Motivating the students for the exercise
• Three-games experiment - investment game and two dictator controls
• Presentation of data and interpretation of results
• Discussion

• Treatment A: investment game
• Treatment B: investment game dictator control for player 1
• Treatment C: investment game dictator control for player 2

• Setup and Procedures for hand-run experiment
• Configuration for web-based experiment

Instructions (or the link to instructions) to come here.

• Draw the budget sets for Player 1 and Player 2.
• Compare the actual amounts send by players 1 and 2 with the Nash prediction for self-regarding preferences model.
• Explain the possible motives behind transfers of both players.
• Explain the tables and graphs of amounts sent in all three games.
• Separate the motives of trust from other-regarding preferences for Player 1 and positive reciprocity from other-regarding preferences for Player 2.
• Show individual payoffs.

Motivating student questions