Improving Outcomes in the Trust Game: The Games People Choose in Oman, the United States, and Vietnam

This chapter shows how people in three culturally different contexts, Oman, the United States and Vietnam, deal with trust situations. We offer two trust-fostering mechanisms principals can choose from—a mitigation-based approach, decreasing the principal’s cost of betrayal, and a prevention-based approach, increasing the agent’s benefits of trustworthiness. We refer to the former as “insurance” and to the latter as “bonus.” We measure what choices principals make, how agents respond to them and how both parties’ behaviors compare to a situation where insurance or bonus was assigned by chance.  We find some differences among the studied countries; but overall, our results show strong similarities. About two-thirds of our principals prefer the safety of the insurance mechanism.  However, by insuring themselves, they make it less likely for their trust to be rewarded. The remaining one-third of our principals prefer sending a bonus, making themselves vulnerable to the agent. This vulnerability pays off by tripling the likelihood of trustworthiness compared to when insurance is chosen. Still, when a bonus is chosen, only about half of the agents reward trust. This fraction is not sufficient to make the principals whole.  In terms of expected payoffs principals would be better off with insurance.