Working Paper: CEPR ID: DP4378
Authors: Fabian Bornhorst; Andrea Ichino; Karl Schlag; Eyal Winter
Abstract: This Paper discovers significant differences between southern and northern Europeans in a dynamic version of the ?trust game? played by Ph.D. students from different nationalities at the European University Institute. Our version of the trust game allows subjects to choose the receivers to whom they make transfers. Southerners are discriminated against, particularly in terms of contacts and mainly by northern subjects. Strikingly, this discrimination builds up rather than dying out with experience. More than for not being trustworthy (i.e. having a low propensity to reciprocate by making a generous payback for a transfer received), Southerners are being punished for their own low level of trust (i.e. having a low propensity to contact another player with a generous transfer), and for this reason end up leaving the game with lower pay-offs.
Keywords: European regions; Experiments; Trust; Trustworthiness
JEL Codes: C70; D00
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| cultural diversity (Z10) | trust (G21) |
| trust (G21) | economic interactions (F69) |
| partner choice (J12) | trust (G21) |
| cultural differences (Z19) | trust (G21) |
| discrimination (J71) | lower levels of trust among southerners (Z13) |
| southern participants (J45) | less return on transfers (H87) |
| northern participants (F55) | lower payoffs for southern participants (J79) |
| northern senders (L87) | higher transfers than southern senders (F24) |
| northern senders (L87) | preference for northern partners (J15) |