Familiarity and trust: An experimental investigation

In Zimbabwe, people in resettled villages trust each other less than people in nonresettled villages. This does not appear to be due to differences in socially transmitted rules of behaviour. Further, there are good reasons to believe that it is not due to the self-selection of a particular type of person into resettlement. Rather, the variations appear to be due simply to a lack of familiarity and to the consequentially greater uncertainty faced by resettled villagers when trying to predict each other’s behaviour in strategic situations.

Rational and Biased Trust

This paper investigates whether expectations of trustworthiness and resulting acts of trust accord with an objective model of trustworthiness or are biased. Combining experimental and survey data, I find that Ghanaian workers appropriately take account of the religiousness of trustees, but expect those with more children to be less as opposed to more trustworthy, and females to be less and the associationally active to be more trustworthy when they are neither. Trustors do not account for the negative impact on trustworthiness of various recent negative experiences and the positive impact of involvement in voluntary work, full time work, and indigenousness.trust; trustworthiness; expectations; field experiment; Ghana

Revisiting Michael McBride’s experiment about “Money, happiness, and aspirations”

In a laboratory experiment designed to test aspiration-based theories of happiness, McBride (2010) found no evidence of the predicted negative effect of own past payments on subjects’ satisfaction with their current round payments. This paper presents further analysis of McBride’s data that reveals such an effect. In the treatment where such an effect is most likely to be observed, subjects’ satisfaction with their payments in a given round is negatively affected by the level of payment they received the last time they faced the same payment probabilities. The overall trajectory of their payments when facing the same payment probabilities is also found to have an effect.Satisfaction, Happiness, Adaptation, Experiment

Trust and expected trustworthiness: an experimental investigation

trust, trustworthiness, field experiment, Zimbabwe, resettlement

Rational and Biased Trust

This paper investigates whether expectations of trustworthiness and resulting acts of trust accord with an objective model of trustworthiness or are biased. Combining experimental and survey data, I find that Ghanaian workers appropriately take account of the religiousness of trustees, but expect those with more children to be less as opposed to more trustworthy, and females to be less and the associationally active to be more trustworthy when they are neither. Trustors do not account for the negative impact on trustworthiness of various recent negative experiences and the positive impact of involvement in voluntary work, full time work, and indigenousness.trust; trustworthiness; expectations; field experiment; Ghana

Enterprise performance and the functional diversity of social capital

Entrepreneurial networks are multifunctional; they can be used to access information about technologies and markets or to reduce uncertainties. A network’s function affects its structure and both the magnitude and nature of the impact that it has on enterprise performance. Networks that reduce uncertainty are small and cohesive. They generate positive spillover effects, while having little overall effect on enterprise performance. Networks that provide access to information about technologies and markets are large and diverse. They have a significant effect on enterprise performance, but tend not to generate positive spillovers. Evidence from the Ghanaian manufacturing sector supports these propositions.

Risk Pooling, Commitment, and Information: An experimental test of two fundamental assumptions

This paper presents rigorous and direct tests of two assumptions relating to limited commitment and asymmetric information that current underpin current models of risk pooling. A specially designed economic experiment involving 678 subjects across 23 Zimbabwean villages is used to solve the problems of observability and quantification that have frustrated previous attempts to conduct such tests. I find that more extrinsic commitment is associated with more risk pooling, but that more information is associated with less risk pooling.The first of these results accords with our expectations and assumptions.The second does not. I offer two explanations as to the origin of the second result and discuss their implications for how we view the assumptions made elsewhere in the literature. I also conduct a test of the relevance or external validity of the experimental results to our understanding of real risk pooling behaviour. In four out of the five villages for which the test could be conducted the networks of risk pooling contracts constructed during the experiment and the networks existing in real life were significantly correlated.Field experiment; Asymmetric information; Limited commiment;

Risk Pooling, Commitment and Information: An experimental test of two fundamental assumptions

This paper presents rigorous and direct tests of two assumptions relating to limited commitment and asymmetric information that underpin current models of risk pooling. A specially designed economic experiment involving 678 subjects across 23 Zimbabwean villages is used to solve the problems of observability and quantification that have frustrated previous attempts to conduct such tests. I find that more extrinsic commitment is associated with more risk pooling, but that more information is associated with less risk pooling. The first of these results accords with our expectations and assumptions. The second does not. I offer two explanations as to the origin of the second result and discuss their implications for how we view the assumptions made elsewhere in the literature. I also conduct a test of the relevance or external validity of the experimental results to our understanding of real risk pooling behaviour. In four out of the five villages for which the test could be conducted the networks of risk pooling contracts constructed during the experiment and the networks existing in real life were significantly correlated.Field experiment, Asymmetric information, Limited commitment, Villages, Economic development, Risk, Insurance

Social dilemmas and shame-based sanctions: experimental results from rural Zimbabwe

Using two economic experiments I investigate how a sample of rural communities in Zimbabwe approach social dilemmas. When provided with an opportunity to impose sanctions in the context of a public goods game, fourteen out of eighteen communities achieved higher levels of cooperation. In thirteen communities the imposition of shame-based sanctions in the form of lighthearted criticism was observed. The resulting data revealed that: both non-cooperators and cooperators were criticised; community members cared about what their neighbours thought of them and made adjustments to their behaviour accordingly; the overall pattern rather than individual experiences of criticism affected subsequent behaviour; those who made low contributions and witnessed the criticism of others who made similar contributions, made higher contributions subsequently; while those who experienced such criticism first-hand made significantly smaller adjustments to their behaviour; those who made high contributions and witnessed the criticism of others who made similar contributions, made lower contributions subsequently; and to the extent that an opportunity to criticise passed by unexploited subsequent levels of cooperation were reduced.