How Does the Relative Generosity of an Individual to a Third Party Affect Reciprocity in the Trust Game?

This study investigates how the relative generosity of an individual to a third party affects reciprocity in the trust game. This experiment builds on Berg et al\u27s (1995) design in which proposers have the opportunity to send money to a responder and the responder then has the opportunity to reciprocate. Any money the proposer sends is tripled. In my experiment, proposers also have the opportunity to donate $1 to a charity. The act of giving to charity is revealed in one treatment and not the other. This allows me to investigate how giving behavior changes when the information that subjects have regarding their counterpart differs. This paper uses a model of conditional altruism to explain changes in behavior. The results support previous findings which show that people are more likely to donate to charity when they are recognized for their donations. Also, reciprocal relationships are more likely to form in the trust game when responders have more positive information regarding their counterpart\u27s preferences