Words speak louder than money

Maroš Servátka*, Steven Tucker, Radovan Vadovič

*Corresponding author for this work

Research output: Contribution to journalArticle

13 Citations (Scopus)

Abstract

Should one use words or money to foster trust of the other party if no means of enforcing trustworthiness are available? This paper reports an experiment studying the effectiveness of two types of mechanisms for promoting trust: a costly gift and a costless message as well as their mutual interaction. We nest our findings in the standard version of the investment game. Our data provide evidence that while both stand-alone mechanisms enhance trust, a gift performs significantly worse than a message. Moreover, when a gift is combined with sending a message, it can be counterproductive.

Original languageEnglish
Pages (from-to)700-709
Number of pages10
JournalJournal of Economic Psychology
Volume32
Issue number5
DOIs
Publication statusPublished - Oct 2011
Externally publishedYes

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