An experimental investigation of trust and sequential trade

Abstract: This paper reports two variations of the trust game, which can be viewed as a model of trade. The experiments extend what is known about behavior in this game by framing the task as a buyer-seller interaction, maintaining payoff privacy, and allowing the cooperative outcome to be endogenously determined through price negotiation. The two game variants differ by the order of moves, which previous research suggests is an important factor in the likelihood of observing cooperation. However, this behavioral pattern is not replicated. While considerable trust is observed, there is little cooperation. Further, the results indicate that the negotiated price does not impact the likelihood of reaching the cooperative outcome