In the investment game each player is endowed with the same amount of money. The first mover decides whether she wants to pass amy of her endowment to the paired second mover; any amount passed is tripled by the experimenter; the second mover decides whether he wants to return any part of the amount received. The trust game is a truncation of the investment game with the following structure.
Overview of the Trust Game
Nash Prediction for Self-Regarding Preferences
The subgame perfect Nash equilibrium of the trust game for the self-regarding preferences model can be solved for by using backward induction. In the second stage the payoff maximizing player 2 prefers strategy Defect over Cooperate. Realizing this, player 1 prefers strategy Exit over Engage. Thus, the NE is given by (Exit, Defect) which leads to ($5, $5) equilibrium payoffs.
The trust game incorporates motives of trust in positive reciprocity and positive reciprocity itself. To test for quantitative effects of these motives one can use a triadic design incorporating dictator controls for trust and for positive reciprocity. For the descriptions of Trust Dictator Controls go to Dictator Game section.
The truncation of the strategy set of the investment game makes the trust game simple in structure and allows for an easy exploration of the dependence of observed behavior on the level of payoffs. One might for example investigate the effects of halving and doubling the payoffs on players? choices. Another interesting alternation of the experimental design is varying the social distance from double-blind to single- and zero-blind.
Common experimental results
In Cox and Deck (2002), 13 out of 30 players 1 decided to Exit while 17 others chose to Engage. Out of 17 players 2 who were sent money by paired players 1, 13 Defected and left players 1 with zero and only 4 Cooperated. As Cox and Deck note, these experimental results imply that trust game is not a very cooperative environment. When comparing the data from the Trust game with the data from Trust Game Dictator Controls, they conclude that the choices of first movers are motivated by trust and that positive reciprocity does not explain behavior of the second movers. From further investigations of the Trust game they observe that it is differences in the level of social distance in the experiment payoff protocol (double-blind vs. single-blind), not differences in the monetary payoff level that accounts for behavioral differences between their data and data from other Trust game experiments.